S&P500 languishes, Trump ready for the fight
Trump is in a decidedly bullish mood. He signalled yesterday that the imposition of US Car tariffs on all vehicles aside from Canadian and Mexican motors was at hand, possibly as early as next week. This was a clear sign to Europe to speed up the negotiation process. It was also a message that Trump can take on Europe and China and is not afraid to do so. It has been widely reported that Trump's barometer of success is the S&P500. One question that I had was would that cause Trump to tread / tweet more carefully given that the S&P 500 is now languishing just beneath flat for the year? I think I have my answer now. Trump is going into combat mode and the S&P 500 is not stopping him.
Adam had an excellent piece yesterday highlighting the 'trio of risks' in the market at the moment with G20 and auto tariffs being two of them. Once Powell's speech (the third risk) is out of the way tomorrow then focus will firmly be on the auto tariffs and the G20 meeting. I am expecting some negative risk off trading headlines into the G20. However, Trump tends to have good meetings face to face with leaders, so at the meeting I am expecting some positive vibes to enter the market next Monday. Be prepared for a flare up though from any of those three events: G20, Auto- Tariffs and the first risk is up later; Jerome Powell speaking later today. A dovish Powell could then be a key tipping point for a USD/JPY tumble with more risk to follow from G20 going into the weekend. So, look for that scenario for a USD/JPY short bias going into the end of the week if that occurs.
