NEW YORK (Reuters) – JPMorgan Chase & Co.'s ( JPM.N ) Trading Card did not buy any US President Donald…
NEW YORK (Reuters) – JPMorgan Chase & Co.’s ( JPM.N ) Trading Card did not buy any US President Donald Trump who sells this week.
PHOTO PHOTO: Specialist Meric Meric Greenbaum works on his New York Stockholm floor in New York on May 17, 201
7. REUTERS / Brendan McDermid
On Tuesday, major stock indices deepened more than 3 percent on renewed fear of a trade war with China – just a few days after Trump tweeted, after a beef dinner with Chinese President Xi Jinping, that “Relations with China has taken a big step forward!”
“It does not seem to actually agree on dinner,” JPMorgan wrote in a note to customers later that day, adding that Trumps tweets “seem if they are not completely manufactured but grossly excessive”.
The bankruptcy of the bank’s trading desk highlights a broader dilemma for Wall Street investors: how seriously to take comments from the White House.
On the one hand, traders have long known that bold bold statements by President Trump do not always hold, which ultimately dampens their impact on securities. On the other hand, market volatility has increased in 2018, partly due to confusion over comments from Washington officials, making them more difficult to ignore.
“It is a decree on which messages should be taken seriously,” says Maria Vassalou, portfolio manager for Perella Weinberg Partners Global Strategic Strategy of $ 685 million.
Trump says that the relationship with China took “BIG leap forward” – tmsnr.rs/2QdIfjz
Trump says he is “a Tariff Man” – tmsnr.rs/2Qgrg00
It’s not just Trump. Unexpected comments from White House officials as finance minister Steven Mnuchin and financial advisor Larry Kudlow have caused business-to-business movements. Each man was quoted by Reuters as a driver of market moves more than two dozen times.
Mnuchin sent US dollars to a three-year low at the end of January after commenting at the World Economic Forum in Davos, indicating that a weaker currency was “good for us”. Within a few hours, Trump seemed to contradict him and said he would eventually have a strong dollar and raise the greenback. [Graphics: tmsnrtrsrs / 2RIZ1Uo]
Steve Mnuchin Awaits Stock Market Reaction – TMSnrtrsrs / 2RBiV3X
GRAPHICS: Trump and Mnuchin Comments Whipsaw US Dollars TmsnrtrsrsRR1Uo
In the case of Kudlow, April 4, he told reporters that US customs duties on Chinese industrial products could never come into force and could simply be a negotiating tactic. Stocks increased following the remarks, as an unnamed White House official later told Reuters was supposed to calm the markets.
However, stock futures fell the next day after Trump said in a statement that he had instructed US trade managers to consider tariffs of another $ 100 billion import from China to punish them for receiving previously announced tariffs.
GRAPHICS: S & P 500 Moves Like Kudlow, Bannon and Trump Weigh Into Trade War – TMSnrtrsrsRA9AsX
Some investors have taken protection against White House-fueled volatility in their own hands.
Juan Gomez, head of the Black Swan Quantitative Advisors, which manages $ 75 million in assets, said he has adapted his option-focused models over the last two years to include more protection against market volatility, in part in response to Trump administration comments .
“At this point you expect controversial headlines,” said Gomez. “At first it made me crazy, but now it’s just a part of what to expect.”
Katina Stefanova, CEO of Marto Capital LP, who handles approximately $ 300 million, said her hedge fund company had created a “Trumponomics” index of securities to secure the broader portfolio.
Stefanova said that her fund’s profit this year – about 7 percent in 2018 to November – would be about two percentage points lower without the index, recently focused on the effects of US trade war, such as Chinese technology stocks, industrial industry in US companies and Asian currencies .
“You still have to take the White House very seriously,” says Stefanova. “The inconsistency itself swings markets and affects the feeling.”
Other investors simply try to review the White House headings.
Daniel Lowen, Chairman of Quantedge Capital USA Inc, said his approximately $ 1.5 billion hedge fund company algorithms did not attempt to predict market movements from Trump administration statements. “We do not try to interpret what we read in the news as input to our investment decisions,” said Lowen.
The head of shares of a multi-billion dollar hedge fund leader, who requested anonymity to speak to the media, said that Trump’s comments are “impossible to ignore”, but the company avoids reactive trade even though it may hurt in the short term. “We are actually trying to isolate our returns from market risk,” said the person.
Whatever reaction, professional investors said that White House’s impact on the markets is difficult to avoid. Securities are almost safe to keep moving statements related to US trade policy, interest rate changes and other financial problems. CBOE Volatility Index, or VIX. VIX, a common measure of perceived fear in the markets, is almost 90 percent this year.
“Many people are good at analyzing their words and figuring out what’s, but it’s very hard,” says Fritz Folts, investment investor, 3EDGE Asset Management LP, which monitors about $ 800 million. “You have to look at what they are doing and not what they say.”
Reporting by Lawrence Delevingne and Trevor Hunnicutt; Further reporting by Lewis Krauskopf and Dan Burns in New York; Editing Neal Templin and Lisa Shumaker
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