The Trump That Tweeted Wolf

The Trump That Tweeted Wolf Market sentiment is shifting. Tariffs on, tariffs off, tariffs delayed, new talks, talks cancelled, retaliation, no retaliation. Prior to this week, markets had large knee jerk reactions of 2, 3, even 4% moves to Trump’s tweets.  However, this week Trump’s tweets didn’t move the markets as much, the reactions appear to have become much more muted. Trump’s tactics remind us of the boy who cried wolf one too many times. TRI’s concern is that the big bad wolf is not just the trade war, but more importantly the downturn of the global business cycle. It appears many investors are ignoring the message economic indicators and asset prices are flashing across equity, interest rates, commodities and currencies. TRI believes the trade war is exacerbating the downturn in economic cycle, not its cause. Investors have now priced in much of the trade war drama and timing of resolution with a high uncertainty premium. In best case structure and timing of any resolution is far from clear, besides the fact the global supply chain is drastically changing.  Markets are now looking through the trade war challenges and will be focusing on economic growth prospects. Let’s see what the…

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