With no allusion to impropriety at all it does seem as if Donald Trump is handling tariffs in a way technical day trading is undertaken in markets. When ‘resistance’ due to home influence (car makers) or ugly stock markets is experienced, tariffs are unwound; in circumstances of ‘support’ where concession might be gained, tariffs are increased. Naming it ‘psychodrama futures’ our fraternity could plot these on a chart we might just, along with our brothers and sisters of differing trading medium, be able to find a comfortable way to trade or predict. Such an irreverent reach for merriment will not assuage the anxiety of Mark Carney (the new Canadian Prime Minister) or Claudia Sheinbaum whose millions of citizens entrust them to negotiate the shifting sands of White House thinking. Nor the hung out Volodymyr Zelensky who is caught between being asset stripped or run over by tanks well before the good intentions of Europe might intervene. “At least he gets things done/doing what he said he would do”, rings out from the US President’s support, but the cost of this new world order and sacrifice for many cannot be counted until someone else puts his hand on the Bible at the front of the Capitol in January 2029.
Until then, tariffs and sanctions will keep macro and fundamental drivers smothered pending market participants developing immunity or trade restrictions that have all bark and no bite akin to the Aesop fable of the ‘The Boy Who Cried Wolf’ too many times. Indeed, it may well be the state of markets, particularly that of equities which in the end police the practices of the current US administration. During his first term it was evident on how Trump paid heed to US bourses. Every new high was greeted with prolific shadowing on the then 'Twitter', with self-aggrandising “that doesn't just happen”. Admittedly, and temporally unreal bearing in mind the amount of interfering, the US President has been in power less than two months, however, the Nasdaq is down 10%. The amalgam of new technologies is performing a stutter and in stock market parlance, an official correction. Double that to a fall of 20% and bourse traders will be talking of an official bear market.

We often touch upon the sensitivity of Gasoline prices in the US, but nothing disgruntles the electorate more than an ailing stock market in which nearly all have some vested interest. The President was probably alluding to the recent stock market slump while addressing Congress last Tuesday. “There will be a little disturbance, but we're OK with that” he said in defence to his pursuance of the tariff policy. Not all financial institutions and indicators agree. Goldman Sachs, citing Trump's economic policy as the 'key risk', increased their odds of a recession over the next year from 15 to 20%. Arguably the most significant data came from the much-tracked GDPNow model of the Federal Reserve Bank of Atlanta forecasting US economic output will contract by an annualised rate of 2.4% in the first quarter of 2025, the worst economic growth since the pandemic era. With recession chat speculation wandering across the wires, the spectre of a slowdown was not put to bed by Donald Trump over the weekend. In an interview with Fox News, he was disinclined to rule out recession. “I hate to predict things like that. There is a period of transition, because what we’re doing is very big.”

Music to the ears of Trump's opponents, but the US does seem some way from recession. According to Forbes and citing National Bureau of Economic Research, there have only been 11 recessions in the last 75 years with the last two being caused by the banking crisis of 2008 and obviously COVID-19. The ‘over-valuing’ of US companies has been on the lips of naysayers for nearly a year, but stock market bulls still stalk the alleyways of dips to re-enter or increase anew. It might just take a very real fall in employment opportunity to really harm the default ‘exceptionalism’ of US markets and ignite recessional quarters. Yet, the Non-Farm Payrolls on Friday still offer a robust job sector. Payrolls increased by 150k, and while slightly lower than expected, they are not yet alarming. The Federal layoffs may not have hit the data yet, but the unemployment rate remained at 4.1% which is well within the parameters of a healthy economy. 

Fixation on the US economy and what might spew forth from the White House into insatiable media interest is not set to go away. Trumpenomics rocks us all on to our back heels and the gravitational pull of the US President has us all rightly orbiting the most influential individual for global market prices there has ever been. Whether or not his meddling will eventually be historically coined as the ‘Trump Slump’ is reserved for posterity.

Trump and China make for slack oil prices this morning

Oil prices are given the runaround much in the same way as its macro market cousins. The mere machinations of tariff on, tariff off, the unsightly forced deference of Ukraine and something of a European war footing being funded by Germany, leaves all our fraternity in quandary. The threat of elevated US sanctions on Russia because of its increased bombardment on civilian power facilities in Ukraine is hollow. Frankly, Moscow has been emboldened by the US considering lifting sanctions in some cases and the White House’s enmity toward Volodymyr Zelensky.
Recently, we touched on falling net length positions in the oil space and any form of institutional length can only return with confidence. Something elusive at present and reflected in the progress of prices last week. M1 WTI finished -$2.72/barrel (-3.9%), Brent -$2.82/barrel (-3.85%), Heating oil -13.89c/gallon (-5.9%), Gasoil -$19.25/tonne (-2.79%), whereas RBOB, due to the specification change and steep contango at expiry saw a gain of 13.84c/gallon or 7.02%. The overall fall in prices was despite some quite interesting 5-year average depleted inventories in the US and a possible future-creating problem of continued low refinery runs.

Much is being made this morning of Donald Trump’s refusal to rule out recession and oil is caught in the selling seen in US bourse futures. Adding more woe are the data from China regarding its inflation. National Bureau of Statistics Consumer Price Index fell 0.7% last month year-on-year and 0.2% month-on-month against a 0.7% rise in January. The Producer Price Index has now fallen every month since September 2022 as overcapacity and weak consumption continues deflation or stagflation bannering by many economists. This comes as a slap in the face during the National People's Congress and no matter the flowery stimulus promised, the black and white of falling domestic prices rejects the idea of any sort of nearby demand.

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