Just a Hypothetical Musing

August 26, 2019

Whether one adores President Trump or is disgusted by him, attitudes toward the man tend to be held extremely. Whether one believes him or thinks he lies most of the time, there is little middle ground. Whether or not he embraces the same visions as you, and whether you perceive him as a victim or a multilateral predator who knows no boundary in seeking unconditional victory, there is or ought to be one truth upon which just about everybody can agree.

The current U.S. president has cultivated enormous power to influence financial markets up or down, and no other public figure, present or past, has communicated thoughts so often on just about every day to the world at large. Equally unprecedented, President Trump’s tweets do not fit a predictable pattern, and he freely touts that a razzle-dazzle style can be an effective negotiating tool. Every message is a stand-alone event and can’t be shrugged off as stale news or more of the same. Each signal packs market-moving potential.

President Trump has created an extraordinarily powerful corridor for potential inside information. In light of the extensive allegations of corruption involving friends, family, and people who have worked for the president, it’s not far-fetched to wonder if anybody’s been tipped off in advance about what he plans to say or actions he might threaten to unveil imminently.

Being the president, moreover, it would be particularly difficult to document proof of such tips. Failed efforts to see his tax returns and the futility of the Mueller investigation underscore the monarchical privileges of a sitting president, notwithstanding the so-called checks and balances built into the U.S. constitution. Who knew?

Given the market sensitivity to Trump’s signals, one could amass a fortune on short-term volatility even in the absence of cumulative movements in asset prices. Last Friday by ramping up tariff threats against China, Trump moved the DOW down over 600 points, and today by citing an offer that Chinese officials are reaching out to the U.S. to resume constructive trade talks — which Beijing denies — he inspired investors at one point to have reversed that drop by half without any concrete Chinese concessions being revealed.

The president’s compulsive tweeting could easily be utilized for enormous financial profit. It’s impossible to know if that’s being done, but what a missed opportunity if that weren’t happening (tongue in cheek).

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

 

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