As the FT has reported, after Trump reached temporary agreements with Mexico and Canada, delaying tariffs for thirty days:
The S&P 500, which had earlier fallen almost 2 per cent, closed 0.8 per cent lower, with utilities and technology stocks among the worst performers.
Investors were, apparently, finding it hard to understand what was going on, which gave rise to this quote:
“What is clear in this new environment is not to extrapolate knee-jerk reactions and moves,” said Guy Miller, chief market strategist at insurer Zurich.
That has to rank high in the pantheon of stupid comments of all time.
There is a coup going on in the USA.
A private individual is running rampage through government departments, wreaking havoc at will.
Trump is declaring totally unnecessary trade wars.
People are terrified.
Supply chains are being disrupted.
Market order is collapsing.
International relations are in chaos.
But the advice is not to extrapolate knee-jerk reactions and moves.
One wonders what it is that Zurich might think does require a market reaction? Clearly, the onset of fascist rule, the end of the rule of law, and the breakdown of all recognisable forms of good governance in the USA are not enough to worry them. I wonder what might in that case? Or are they really stupid enough to think they can win from this and so should just go along with it?
This quote was another reaction:
“My head hurts,” said one FX trader at a large European bank. “It's almost impossible to trade, there's too much [news] to process. Buy. No wait, sell. No, actually buy. [Or] just give up,” the person added.
Is that it? Just give up?
That, of course, is all that is required for evil to prevail. Maybe markets are happy with that. There is little evidence to the contrary. After all, nothing appears to have been officially said by so-called market leaders. There is no expression of concern or outrage. No one is saying what about all that might be of value that is being destroyed? There is just a trading stance to take.
But that's pretty much the same as the position our politicians are taking.
Are neoliberals all so lame that fascism does not require comment from them?
Apparently so.
No wonder they need to be consigned to history.
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Trump has declared the drugs cartels to be terrorists. He is acting like an organised crime boss (or if you prefer, like a terrorist) himself. Nice economy you have there. Would be a shame to see it demanded by tariffs. Now give me what I want. Let’s see what he asks for next in 30 days.
I hope Elon Musk has his cybersecurity protocols worked out. It would be a shame if his DOGE workers inadvertently introduced malware into the computer systems of the US government. Or indeed facilitated the leaking (or theft by foreign powers) of all sorts of sensitive or confidential information.
Now there’s a thought and not necessarily a bad one either – the malware, leaking, etc., I mean.
It would let us all know exactly what the world’s policeman gets up to and how many have suffered at the hands of the ‘greatest power in the world’.
The bane of autocorrect. “demanded by tariffs” should be “damaged by tariffs”. Oh well.
To the main point: are markets going to just watch? Yes. As long as they can make some money, many perhaps most businesses and their owners won’t care. As history shows, as far as employing slave labour, or worse.
The real question is whether the people going to stand for it. By the time they realise what they have lost, it may be too late.
Both very relevant
Thinking about it, markets operate within certain expectations.
Trump is way way outside of these
They havnt got a clue what to do next……….
I suggest that many traders are probably holding on tight in the hope that normal service will be resumed shotyly
Ahhh Richard, there you have it – you’ve touched on a major weakness in modern politics – local and national – in the UK at least.
I’m working on a local development scheme to build some new flats and we have ran into problems. The local councillor seems to think that problems should not exist. End of. But you see, if you did not have problems, then you would not need to have a job, there would be nothing to manage or overcome to get things done. If you did not wish to take on problems, then why bother doing anything?
It’s hard to see what produces this sort of lame thinking. But I think its a mixture of a lack of investment (so that problems are pilling up to unmanageable levels) and a lack of domain knowledge in organisations dealing with operations (a lack of capacity, training etc.,, itself part of a lack of investment.
Thus this is Tim Snyder’s politics of ‘no ideas’ that is ripe for exploitation by those wishing to use fascist political science.
Much to agree with
Exactly right. Looks like the wonderful, all knowing god free market hasn’t got a clue what to do in the face of the lunatic fascist Trump.
We need to either actively try and intervene in US politics in some way to oppose Trump and help those in the US who opposed him, or give up on the US and have less and less to do with it.
So rejoin the EU ASAP for a start.
But Starmer, Reeves etc., are determined to make us suffer so no rejoining the big trading bloc on our doorstep. God forbid that they make things easier (and maybe cheaper) for the people whose best interests they are supposed to have at the heart of government.
Unfortunately, you are correct re the cowardly non-leader Starmer and the clueless idiot Reeves. Starmer is trying to pretend that the UK won’t have to make a choice between the EU and Trump if there’s a trade punch up. So there’s no difference between closer co-operation (or preferably rejoining ASAP) as an equal member the world’s largest trading area which stands for, however imperfectly in some areas, human rights, environmental protections and regulation of huge corporations, or go crawling to a country rapidly falling onto fascism, oligarchy and chaos?
And presumably prostituting the UK to US technology giants for the sake of Reeves’ all-consuming obsession with growth is fine as well?
I fear you expect to much from “markets” – it requires individuals with backbone to act. David Lebryk (US Treasury civil servant) has acted but the world, to it’s shame, as moved quickly on. Other business leaders are (at best) keeping quiet hoping to survive 4 years or, (at worst) cheering him on for narrow personal gain. To be honest, they are in a tough spot – standing up to Trump might feel good – it might even do some good… but at huge cost to your employees who get laid off when Trump turns his fire onto your firm. I really don’t know what I would do in their shoes.
Most comments from “market pundits” are usually nonsense and those you quote are prime examples….. but they contain some truth; market participants are refusing to play anymore. Now, we may not weep for the speculators that have been burnt but in the end, “real investors” will divest and go elsewhere, “real business” will not sign contracts or invest. Eventually this will severely damage the economy.
Everyone is looking at the S+P500 index as it gyrates…. I would be looking at the bond market. It is stable right now but the next round of US Treasury Bond auctions starts soon (details announced tomorrow, auctions on 11, 12, 13 February). Foreign Central Banks are always big players. Will they stay that way? This time? Next time? the time after that?…… there are a lot of bonds to sell!
I would add, the question I hear most often is “how much money are ‘FoTs’ (Friends of Trump) making as the insider trade each U-turn on policy?”
Clive, would you be able to expand on that please? Are you implying Trump’s trade decisions are driven by corruption?
No, not DRIVEN by corruption (well, not corruption in the narrow sense that he is doing all this to make a quick buck in the markets)… merely a BYPRODUCT of his actions.
His constant market moving policy changes will be seen as a far too tempting an opportunity for FoTs to make a buck.
Not saying this is happening…. but it’s the first thing I hear asked when chatting with markets people.
I am niot surprised
The cynicisim is justified
Not sure if you know of Julia Davis and her Russia Media Monitor site on Twitter. Absolutely invaluable at cutting through the dis and mis information and propaganda – especially from the Kremlin.
As she’s been noting these past few weeks, the Russians are beside themselves with what Trump – and Musk in particular – are doing. Basically wreaking the US government. And that’s before the dreadful weasel (sorry, an insult to weasels) Kash Patel is confirmed to take over the FBI. The Russkies are particularly happy that now Republicans have out and out become the anti-democracy party they’ll also confirm Tulsie Gabard as they recognise her as ‘one of theirs’. I joke not.
Wherever did the party of Ronald Reagan disappear to?
Anyway, here the links to Julia’s gem. Worth following on a daily basis.
https://x.com/JuliaDavisNews/status/1886613201829130402
Thanks
Just a thought but is the Trump aim replicate the chaos of the collapse of the USSR in the USA. Giving the oligarchs the chance to buy up major assets at 5% of their previous value?
My thoughts exactly ! For America read the New Russia !
Ruled by a dictator surrounded by Oilgarths.
Media controlled – tick
Justice system controlled – tick
Government controlled – working on it
Next – trade, public services, military then the people
I just hope the people and the military turn on him, and sooner rather than later …
The political philosopher Sheldon Wolin called our system of governance “inverted totalitarianism,” one that kept the old iconography, symbols and language, but had surrendered power to corporations and oligarchs. Now we will shift to totalitarianism’s more recognizable form, one dominated by a demagogue and an ideology grounded in the demonization of the other, hypermasculinity and magical thinking.
Fascism is always the bastard child of a bankrupt liberalism.
The utopian ideology of neoliberalism and global capitalism is a vast con. Global wealth, rather than being spread equitably, as neoliberal proponents promised, was funneled upward into the hands of a rapacious, oligarchic elite, fueling the worst economic inequality since the age of the robber barons. The working poor, whose unions and rights were stripped from them and whose wages have stagnated or declined over the past 40 years, have been thrust into chronic poverty and underemployment
There could be a sort of method in the madness.
The ‘flooding the zone’ strategy- to issue a plethora of threatening edicts so quickly so as to confuse / paralyse other countries/ political opponents/ markets seems to have sort of worked with Canada and Mexico – in the sense that Trump has got them to make visible concessions – troops to ‘protect’ US borders etc. So Trump quickly postpones or withdraws the edicts -but still keeps them in play , as a lever.
On the other hand the China tariffs already implemented and quite a cool targeted, but delayed response from China. Maybe China will be the only major stabilising force, possibly supported by a fairly feeble EU
The trick wll be for Trump and his oligarchs to keep his MAGA popular base onside while they loot state assets as JF above suggests .
He must assume he can keep MAGA sufficiently entertained with the Greenland/ Panama/ Canada invasion threats, while his tariffs will raise enough so he can lower taxes on ‘ordinary people’ , but not enough to raise prices, while Musk and co syphon off the public sector.
A full network systems analysis would probably show there is no feasbile solution – but its a nightmareish frighteningly interesting experiment.
Heather Cox Richardson
https://heathercoxrichardson.substack.com/p/february-3-2025
makes interesting points in the 3 February newsletter:
QUOTE
“Trump announced he would levy tariffs of 25% on most products from Mexico and Canada and of 10% on products from China, beginning at 12:01 a.m. on Tuesday, in violation of the trade agreement his own team had negotiated during his first term.
[…]
“Today, the president of Mexico, Claudia Sheinbaum, announced that she and Trump had “reached a series of agreements” that would pause the threatened tariffs for a month. Mexico agreed to “reinforce the northern border with 10,000 elements of the National Guard immediately, to prevent drug trafficking from Mexico to the United States,” while the U.S. “commits to work to prevent the trafficking of high-powered weapons to Mexico.”
“When Trump announced their conversation shortly afterward, he omitted the part of the agreement that committed the U.S. to try to stop the flow of guns to Mexico. He also did not mention that, in fact, Mexico committed to putting 10,000 troops at the border in 2021. As Catherine Rampell of the Washington Post commented: “Any news outlet reporting Mexico conceded anything to Trump to get him to delay tariffs has not done its homework. Trump boasts he got Mexico to commit to stationing 10K troops at our border. Apparently he didn’t realize Mexico already has 15K troops deployed there[.]”
“The crisis at the northern border worked out in a similar fashion. After conferring, Prime Minister Justin Trudeau and Trump announced a 30-day pause in the implementation of tariffs. Trudeau agreed to appoint a border czar and to implement a $1.3 billion border plan that Canada had announced in December.
“In other words, while Musk was causing a constitutional crisis, Trump created an economic crisis that threatened both domestic and global chaos, then claimed Biden administration achievements as his own and declared victory.”
It’s long, I’m sorry, but the facts seem to be worth stressing. If it’s too long I will understand.
We are now enduring a coup like a third-world country, and I cannot see the end of the story, but history teaches us that all tides turn. We just don’t know when. Meanwhile, here is the question: If the full faith and credit of the United States is any component of the value of the U.S. dollar, why is the dollar not dropping in value? Could it be because entities holding dollars don’t want to lose money? Could it be that the human world has now the values of Genghis Khan?
My father was a “libertarian” economist who wrote the Kennedy and Reagan tax cuts. I wonder what he would think today.
For myself, I think Musk, Trump, and the marketocracy are making war on representative government. “Marketocracy” means the overpowering and replacement of national laws and sovereignty by corporate laws and sovereignty, without the consent of the governed and without civil society’s access to redress. The marketocracy project goes back to the 1970’s – “The world’s political structures are completely obsolete. The critical issue of our time is the conceptual conflict between the search for global optimization of resources
and the independence of nation-states.”–Jacques Maisonrouge, then Senior Vice President, IBM, 1971.
I see Musk and his fellow sociopaths in this historical context. What I don’t see is what it will take to stop them. I do see that it is not the voting public of the USA.
Trump will suspend the financial markets as a crisis measure.
Mark my words.
see https://cupola.gettysburg.edu/cgi/viewcontent.cgi?article=1188&context=ghj
Looks like the American people are getting themselves organised against the coup. There is acknowledgement that the Legislative branch is not doing enough (or anything) to prevent Trump, Musk and their henchmen from acting lawlessly.The Judiciary has now entered on to the scene. Trump and Musk, etc., are going to be buried under lawsuits which have now been lodged with various Courts. Two are worth mentioning:
A lawsuit against Musk for violating people’s privacy rights regarding his gaining access to sensitive data when his hackers took over the Treasury database – and, no doubt, other Government departments’ personnel databases – thus getting his hands on every American’s financial and other information. The Judges’ private financial details will also be in Musk’s hands – I’m sure the Judges will love that (!)
Another lawsuit is being brought by 9 FBI agents, on behalf of all FBI agents, against the Department of Justice (and by extension Donald Trump) for trying to obtain the names of the agents involved in the 6 January investigations – Trump intends to sack them. No doubt Trump also intends to publish those private details so that his supporters may very well ‘go after’ those individuals for carrying out their lawful duties – there’s no other reason he would want such information except to get his revenge.
The question is, if the Court cases go against Trump & Musk, will they obey the Courts’ decisions? We know that Trump doesn’t think the law is for the likes of him and didn’t the Supreme Court give him immunity whilst carrying out actions whilst President.