Trump lied about the result of his dinner with Xi regarding the trade war. Yesterday millions of people put billions of dollars into the market on the positive news and the market was up 1.1%.
“It doesn’t seem like anything was actually agreed to at the dinner and White House officials are contorting themselves into pretzels to reconcile Trump’s tweets (which seem if not completely fabricated then grossly exaggerated) with reality.” – JP Morgan trading note 12-4-18
Last night it became clear that Trump’s tweets and statements were exaggerations at the minimum and more likely outright lies. What he did would warrant an investigation by the SEC if he were the CEO of a publicly traded company. Elon Musk was fined millions for pumping the price of his stock on fake news. Trump pumped the price of almost all stocks around the world with his fake news. His lie is objectively one of the most financially damaging in his presidency so far. As a result, stocks around the world sold off very hard today. We were down over 3% today, and had Trump told the truth, we probably would have been somewhat stable over these last two days.
The market was given it’s most obvious signal so far that Trump lacks appropriate understanding of financial markets and it rebelled.
Parts of the yield curve inverted (not a good thing) overnight after the Trump news broke. It was a big moment as we’ve been avoiding yield curve inversion even thought we’ve been close for about a year. It’s inversion portends a recession within 18 months. There’s a joke in financial markets that yield curve inversion has correctly predicted 11 of the last 9 recessions.
The only hope left to save the market in Trump’s term is for them to do what they did with NAFTA, which is to do virtually nothing, remove tariffs, and pretend they made a deal.
This was a very big 24 hours in Trump’s Presidency.
When companies break reporting laws like Trump did, there are always class action lawsuits that follow as investors report that they’ve lost money. Sometimes investors get paid on the losses that they had based on the move they made due to the fake news.
Millions of people around the world are owed billions of dollars for investing yesterday on Trump’s fake news.