Global Macro Trading Journal
- Thread starter Daal
- Start date
A very important trade that is setting up in the US now, 'buy the rumor sell the news' type effect on the Trump presidency (that along with his first week/month which is likely to involve 'crazy' announcements). The S&P500 will probably sell-off as it gets closer to inaguration (Jan 20), bonds will rise along with gold. But of course, timing is everything. Of these 3, buying bonds is probably the better way to express
The WSJ jumps on my Trump trade thesis like 1 month later
http://blogs.wsj.com/economics/2016/12/22/is-donald-trumps-trade-talk-confusing-on-purpose/
"Some investors and trade experts say the uncertainty about Mr. Trump’s trade plans could give him leverage. Trading partners may fear the U.S. really would engage in trade war if it doesn’t get its way—but also may have some hope that a Trump administration would be open to a reasonable deal."
"The emphasis on leverage and multiple approaches to dealing with adversaries comes straight from Mr. Trump’s book, “The Art of the Deal.”
“The best thing you can do is deal from strength, and leverage is the biggest strength you can have,” Mr. Trump wrote. “I never get too attached to one deal or one approach.”"
Incidently I'm re-reading The Art of the Deal to see if I notice things that I missed but at this point my read just confirmed the initial suspicions that he is a firm dealmaker that likes to use leverage/creativity and other tools when putting together deals
http://blogs.wsj.com/economics/2016/12/22/is-donald-trumps-trade-talk-confusing-on-purpose/
"Some investors and trade experts say the uncertainty about Mr. Trump’s trade plans could give him leverage. Trading partners may fear the U.S. really would engage in trade war if it doesn’t get its way—but also may have some hope that a Trump administration would be open to a reasonable deal."
"The emphasis on leverage and multiple approaches to dealing with adversaries comes straight from Mr. Trump’s book, “The Art of the Deal.”
“The best thing you can do is deal from strength, and leverage is the biggest strength you can have,” Mr. Trump wrote. “I never get too attached to one deal or one approach.”"
Incidently I'm re-reading The Art of the Deal to see if I notice things that I missed but at this point my read just confirmed the initial suspicions that he is a firm dealmaker that likes to use leverage/creativity and other tools when putting together deals
Its only the perma anti-Trumpists that are missing what is going on with their simplistic view of 'trump wants a trade war!', anyone who's got any sense is starting to figure out that there is a lot more to this. I suspect my view will become consensus within a year or two
But best thing Trump could do on trade is to get a game theory expert on his team, that would just make his plans even more likely to succeed
But best thing Trump could do on trade is to get a game theory expert on his team, that would just make his plans even more likely to succeed
The breaking point for China on trade will be when there is social unrest. These bureucrats/tirants aren't used to be pushed around, they will fight Trump but the real leverage is with the US, its the largest importer in the world. If they cut or credibly threaten to cut down imports from China, this could lead to a recession there. This would lead to civil unrest and the government could fall. Its this fear that is likely to get China to bend over and change things. Of course, all of this will come at the expense of short-term volatility. The Trump plan is will involve lots of short-term volatility, if his plans play out though, long-term the US will be better off
The Trump alarmists dont seem to understand that talk is cheap, its a very cheap way to see if your opponents will fold and do what you want. Actions aren't as cheap, they matter more. I still think Trump will bluff in some actions (you got to earn some credibility) but it will be more calculated and there will be more 'sense' into them. You are not going to see a real trade war, but rather, a dance in this negotiation to see who fold first. Some tariffs here and there but Smoot–Hawley, no
The CRAZIER you act/look/is perceived, the less you need to do. If you are a CREDIBLE lunatic, all you got to do is talk, you dont have to do a thing. Thats a very effective way to achieve your goals. But sometimes the other guy will test you, to see if you are for real. Thats when you got to act to, put a tariff here and there, until he folds
I just switched from my 14-15y US bonds to 27y US bonds. I'm essentially starting to scale in my 'trump dip' trade that will involve longing bonds, shorting stocks and buying volatility. Looks like Trump is ramping up his 'crazy' talk/bluffs and it looks prudent to me to start to scale in the trade. Its possible that I'm early as there is the Santa seasonality and the optimism could continue but I better start now and add more positions as it gets closer to inaguration
I figure, at worse case scenario I will just hold these as a recession/risk aversion hedge. Bonds are quite oversold and now there is some yield there to pick-up