After wiping the last of their “Trump bump” US equity markets were quieter on Wednesday, despite their recent selloffs fueled by the tariffs.
The mild gains today come on the heels of President Trump’s spirited speech last night in which he doubled-down in defense his trade policies. I bet investors expect powers to step up.
This can be in the form a “Fed put” You can also use a “Trump put” It’s anyone’s guess. It’s fair to say that investors don’t really care what the answer is, so long as they start seeing some improvement in their stocks.
Trump made it clear last night that the stock market is not a concern for him. Trump reiterated the fact that short-term losses are to be anticipated, but long-term benefits will follow. If there’s a specific level the S&P 500 has to hit for the administration to start walking back its more aggressive economic policies, he didn’t seem concerned about reaching it.
Tariffs “are about protecting the soul of our country,” Trump tweeted on Tuesday that he believes “that the United States is a great place to live” “OK” The following are some examples of how to use “a little disturbance.”
The damage is being repaired by his Cabinet. Howard Lutnick, Commerce Secretary at Bloomberg today, said that Trump was a liar. “listening to the offers from Mexico and Canada” The following are some examples of how to get started: “thinking about trying to do something in the middle.”
Trump spoke with Justin Trudeau, the Canadian prime minister today about tariffs. Trump, however, said that in an Truth Social article he would not be able to budge until the flow of the drug fentanyl is stopped. Ford, General Motors (GM) and Stellantis received a 1-month-long tariff exemption.
This signalling was enough to calm markets — for now at least. The S&P 500 was trading 0.9% higher at 2 pm ET while the Nasdaq Composite had gained 1.1%.
Like I said before, if there’s an amount of S&P 500 pain Trump is willing to endure, we don’t know it. Analysts make guesses.
Bank of America strategists say the so-called S&P 500 “strike price” For a “Trump put” — i.e. a policy change — is around 5,720. The index reached that level on 5 November. Yesterday the index was around 5,780. This is the lowest closing since Election Day.
Some say that a loss of more than 5% in a single day would trigger Trump to change his policy.
DataTrek Research founder Nicolas Colas believes that volatility is what investors should be watching. According to Colas, a VIX score of 36 is enough for a trigger. “Fed put,” Trump’s volatility price may be higher than the current strike price.
Colas also said that mild market relief isn’t going to be enough for him to believe that the current volatility has ended. He believes we won’t see “tradeable lows” Until the VIX reaches 27+. We are at about 23 right now.
Ben and myself will both attend the Blockworks Digital Asset Summit (which coincides with Fed’s next rate announcement) on March 19. (You should also come).
The markets are only pricing in a mere 5% of the chance that central bankers may cut interest rates. In May, they are optimistic.
I have a feeling that Trump is more tolerant of pain than Powell. It would be difficult for Trump to back away from his commitment to seeing through most of the trade policies he has put in place.
Enjoy the moment. Who knows how much longer it will last?
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