Wednesday, January 2, 2019

Tom Luongo — Trump Learns Markets Don"t Like Uncertainty

If there’s one thing I’ve learned in my twenty plus years of market-watching it is that markets hate uncertainty. Uncertainty breeds volatility and volatility usually prefaces a panic.…

No matter how powerful you are, you can’t dictate to markets for very long without there being a comeuppance. Even the Fed understands this. That’s why for the past ten years central banks have embarked on a communications policy to massage markets first, to prep them for any changes in monetary policy.
Because shock policy moves cause shocking amounts of money to move, creating panics both up and down. Trump thinks he can conduct foreign trade like he conducts a real estate deal – shock and awe up front to create chaos during negotiations and then settle. But you can’t negotiate with investors and fund managers.
They simply react to chaos with pulling their money off the table and looking for safe places to hide it. And that’s the lesson from this period of volatility in the global markets....
Failing to take the big picture into account, the "master persuader" makes the wrong moves.

Strategic Culture Foundation
Trump Learns Markets Don"t Like Uncertainty
Tom Luongo

No comments: