What a difference a week makes.
It was just on October 3 that Trump, gloating in the warm glow of a new all time high in the S&P tweeted that “The Stock Market just reached an All-Time High during my Administration for the 102nd Time, a presidential record, by far, for less than two years. So much potential as Trade and Military Deals are completed.”
The Stock Market just reached an All-Time High during my Administration for the 102nd Time, a presidential record, by far, for less than two years. So much potential as Trade and Military Deals are completed.
— Donald J. Trump (@realDonaldTrump) October 3, 2018
Fast forward just 1 week when things are decidedly less glowing, and on a day in which the VIX exploded, the Nasdaq tumbled 4%, the S&P slumped below all key support levels, and the Dow plunged more than 800 points, its worst day since February in a Black Wednesday for tech stocks, there is far less cause for celebration.
In fact, according to CNBC’s Eamon Javers, Trump was briefed on the market sell off this afternoon. And while Trump will most likely not tweet any celebratory message today, a senior White House official give Javers the following comment: “This is a bull market correction. It’s probably healthy. This will pass and the US economy remains strong.”
President Trump has been briefed on the market sell off this afternoon. A senior White House official gives me this comment now: “This is a bull market correction. It’s probably healthy. This will pass and the US economy remains strong.”
— Eamon Javers (@EamonJavers) October 10, 2018
So who was behind the selloff: deleveraging risk parity funds? Selling CTAs? A wholesale derisking into a higher interest rate environment. Or… could it be China, with its $1.5 trillion in reserves sending Trump a clear message what could happen if Trump continues to unleash hell in Beijing’s general direction?
While it is unlikely that the culprit will be revealed, there is nothing that would prevent Trump from pushing the former narrative and blaming Beijing for today’s rout.
That said, there is one more person who should be rather nervous after the plunge: recall that exactly 24 hours ago Trump said that he doesn’t “like what the Fed is doing.” What better justification could Trump have to “push” Powell than to accuse him of the second worst selloff of 2018?
Indeed, as …read more