It seems many are starting to tire of President Trump’s outbursts already, but as Bloomberg's Mark Cudmore notes, while this might be worrying on a geopolitical level, it’s a positive for markets... until, of course, it's not.
Trump comments are becoming a catalyst for jokes rather than market moves. Yesterday it was revealed that Trump told Mexico’s president that he might send troops across the border and the concept barely registered across assets.
[ZH: in fact, realized volatility in the S&P 500 dropped to its lowest since 2007...]
It’s concerning on a number of levels that moral outrage is declining so quickly. But from an investment standpoint it does mean that it’ll take something really shocking to sustainably hit risk appetite.
Global economic data continue to be strong and should provide optimism if the administration doesn’t manage to derail trends.
This was meant to be the year of macro but so far fundamental analysis is taking a back seat to Twitter feeds. As a result, it’s actually a stock-pickers market. Those who are bearish don’t buy the VIX but instead purchase protection on individual sectors or equities that may be impacted by the next policy pronouncement.
So far, the administration’s decrees seem distinctly negative for global growth.
But markets are trading relatively well all things considered. Tuesday was the fourth straight day of losses in the S&P 500 Index and the session still closed within one percent of the record high.
[ZH: It has now been 78 days (Oct 11th) since the S&P 500 fell 1%...]
I remain worried and bearish.
Financial markets are overly complacent to the severe risks from Trump’s actions and a nasty correction is possible. However, the more outbursts survived by the market, the less marginal impact each will have.