The crude oil market is hostage to a global economy which shows every sign of entering into a recession in 2020. Yet the volatility it experiences seems mostly on weekly US inventory numbers but more extraordinarily as a consequence of a bombastic and self-serving US President. Concerns about trade will continue to persist as long as the market cannot confidently rely on the veracity of the information it receives, and most recently the information President Donald Trump provides. For the self-appointed No1 combatant of “fake-news”, President Trump now seems to be firmly ensconced as its foremost purveyor .
Recently trade concerns resurfaced after China’s Foreign Ministry claimed it was unaware of any telephone conversation or calls between the United States and China on trade. It later urged the US to correct its” wrong actions and create conditions for talks”
Speaking at the G-7 summit in Biarritz President Trump had said he was optimistic about the prospects for a trade deal with Beijing. He said China had contacted his trade team overnight. Last Tuesday, to suggest both sides “get back round table”. President Trump went on to say he had great respect that China called,” they want to make a deal”. All this came after Pres Trump had referred to the Chinese Premier, as both a foe and an outstanding leader had great respect for too.
But Trump has form for inventing telephone calls as he did earlier in the year when he boasted he had spoken with OPEC on the phone and they were going to bring prices of oil down in response. So many are the incidences of his blatant deceit, they no longer seems to come with any admonishment or shame.
The American President’s oft contradictory and vacillating statements have had huge impacts on financial markets as actors attempt the baffling task of interpreting his rhetoric. Trump tweets are now a firmly established factor in gauging market sentiment. The ability to accurately interpret these messages can be the difference between profit and loss. The dramatic swings create unexpected and unpredictable moves in the direction of the market, depending almost entirely on the mood of the President. Perhaps a statistical function as an addendum to a risk metric should be created to capture this new variable.
It does not help that most of these comments are hyperbolic in nature and made outside normal trading hours, quite frequently nocturnal. President Trump insists that is the way he negotiates, he goes on to say it has held him good stead over the years, and is doing even better for the country. Many observers would disagree, his Trumpian play book, a mix of destructive disorder, bromance and poker have not served him well, which would be quite plain If his business record was put under any degree of scrutiny. Most sensible analysts react to Trump tweets with extreme caution. It is now conventional wisdom amongst most traders and investors that it is a fool’s errand to try and trade on headlines created by Donald Trump.
Despite President Trump, suggesting he might be having second thoughts over the US-China trade war, he went on to crash the renminbi to a new 11 year low along with stock markets in the Asia-Pacific by stating his intention to slap even higher tariffs on Chinese goods. Demonstration if needed of his ability to move markets. The use of such power needs to be judicious and responsible.
Not for the US President. In what has now become a familiar refrain The White House later came out to clarify President Trump’s statement. They stated that it had been greatly misinterpreted and it was his intention to pursue an even more aggressive trade policy toward China and that his regrets were not raising the tariffs even higher.
But there is an even more substantive issue which has not attracted a great deal of scrutiny thus far. In the event that insiders have prior knowledge of a contradictory Trump statement, such knowledge would be of immeasurable commercial value. If I had prior knowledge that President Trump was to make a statement to the effect he was completely removing all triffs from Chinese imports to the US, I would make a fortune, as would any trader. Is there a method to his contradictory statements which are concieved to move the market in a certain direction, for example shorting futures and commodity positions. Clearly there is no evidence to support this theory, but the frequent contradictory and conflicting announcements certainly warrant further scrutiny. It should not be the case any more than the Chairman of the Fed being allowed to make rash comments. it is an issue that neither the SEC or the CFTC are equipped to handle.