Recent Trump comments show likely pre-election volatility

Trump Comments Making Waves Again

Remember when we used to get up and the first thing, we would do was check what Trump had tweeted overnight? Those were fun times, contending with ‘Trumpremia’. With the election in November looming ever larger, his comments on a range of subjects are taking on greater significance again.

Lots to contend with — his commentary will be more market-moving the closer it gets to the election. A few weeks ago, investors were not really pricing November scenarios; but as I think we talked about in a recent Overleveraged podcast, they ought to be warier. We are starting to get to the business end now. And if past performance is anything to go by, Trump’s remarks on a variety of topics can create volatility.

Concerning China

So, yesterday’s interview was a bit of a blast from the past. “China is right now our boss,” the former president told CNBC. “They are the boss of the United States, almost like we’re a subsidiary of China.”

Donald Trump likes to shock and use rhetoric for dramatic, vote-winning effect. But amidst an absolute torrent of verbosity yesterday there were some nuggets we should be paying attention to, and this remark calling out the Chinese automobile industry for particular attention is one.

Donald Trump on Tariffs and Social Media

Tariffs are coming, should he win. The former president indicated he is very likely to reinstate duties on foreign goods should he get a second term. And his ire is not solely directed at China – the EU “rips us [off] almost as bad as China, but they do it with a smile”.

Trump explained: “The whole topic of tariffs is so simple. Number one, it’s great economically for us, and it brings our companies back because if you charge tariffs to China, they’re going to build ... their car plants here and they’re going to employ our people.”

Social media companies also need to be on watch should Trump get elected. Meta Platforms slumped 4% as Donald Trump branded Facebook “the enemy of the people”, though he said he would not like to ban TikTok as that would simply empower Facebook.

Elsewhere, UK Wages Cool, Stocks Rise

Stocks rose in London early Tuesday after data showed UK wage growth cooling, confirming the Treasury’s and Bank of England’s view that inflationary pressures are easing. The FTSE 100 index added around 0.9% early doors to touch 7,743, its best in about three weeks.

It came as sterling retreated for a second day, with GBP/USD edging back to 1.27820, having flirted with the 1.29 handle on Friday. Sterling fell as UK wage growth cooled to a more modest 5.6% from 5.8% in the prior month, prompting traders to pull forward their expectations for when the BoE cuts rates – odds of a June cut shortening somewhat. The MPC can breathe a bit easier now.

The S&P 500 index fell slightly on Monday with traders looking to the US inflation report today. The US dollar was steadier on Tuesday after touching a two-month low in the previous session. Elsewhere, the CAC 40 in Paris hit a fresh record high above 8,000 this morning. Oil firmed up a touch above the 200-day line again, whilst gold and Bitcoin were steady near their respective all-time highs.

Bank of Japan to move in March?

Not so fast, cautions Bank of Japan Governor Ueda. He said: “Japan's economy is recovering moderately, although weakness has been seen in some data.” The remarks tempered optimism about the durability of inflation and saw traders dial back bets for the central bank to exit negative rates at its meeting next week.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.