{"id":82568,"date":"2024-06-27T14:56:26","date_gmt":"2024-06-27T14:56:26","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/27\/volatile-and-unpredictable-why-fast-money-traders-like-donald-trump-times-of-india\/"},"modified":"2024-06-27T14:56:26","modified_gmt":"2024-06-27T14:56:26","slug":"volatile-and-unpredictable-why-fast-money-traders-like-donald-trump-times-of-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/27\/volatile-and-unpredictable-why-fast-money-traders-like-donald-trump-times-of-india\/","title":{"rendered":"\u2018Volatile and unpredictable\u2019: Why fast-money traders like Donald Trump – Times of India"},"content":{"rendered":"
\"\u2018Volatile<\/div>\n
Donald Trump\u2019s from-the-hip style may start making financial markets volatile again \u2014 and that\u2019s just fine for a breed of global fast-money traders who thrive on that.
With he and President Joe Biden running neck-and-neck ahead of their first debate Thursday night, investors have already been trying to game out how the Republican\u2019s return to the White House could affect everything from the electric-vehicle industry to the direction of long-term interest rates.
Markets, as a rule, don\u2019t like that kind of uncertainty. But for a subset of hedge funds that swoop in and out whenever big swings and anomalies make prices look briefly out of whack, that\u2019s almost beside the point.
What they see in Trump is far more simple: Memories of the opportunities that arose during his four years in office, when his comments and social-media posts sometimes surprised investors, triggering dramatic short-term moves in the prices of stocks, bonds and currencies.
\u201cPolitics aside, if you ask a trader whether he wants placid Biden or stormy Trump, the trader is going big wave surfing – so it\u2019s Trump,\u201d said Calvin Yeoh, portfolio manager at hedge fund Blue Edge Advisors in Singapore. \u201cTrump is more volatile and unpredictable.\u201d
During the Biden years, of course, there\u2019s been no shortage of volatility. The inflation surge, Russia\u2019s war in Ukraine, and the Federal Reserve\u2019s rate hikes all did plenty to whipsaw markets. As a result, some broad measures of expected market swings have been higher than they were during much of Trump\u2019s tenure, and it\u2019s possible that conflicts with Republicans over issues like the debt ceiling could escalate if Biden wins a second term.
Yet Biden has hewed to a traditional style honed by a decades-long career in Washington. By contrast, Trump relished communicating directly with the public through Twitter posts, leaving traders scrambling to determine the implications.
With the election still more than four months away, it has so far been overshadowed in markets by the strength of the economy and speculation about when the Fed will start dialing back interest rates. Even so, there\u2019s been some early preparation for heightened volatility around the November election, particularly if the outcome is in doubt.
\u201cThe consensus view is that Trump will create volatility,\u201d said Vineer Bhansali, founder of the Newport Beach, California-based asset-management firm LongTail Alpha. \u201cThe market is already priced for that to happen. So the surprise will be if Trump wins and actually there is less volatility.\u201d
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Trump\u2019s initial victory in 2016 dealt a jolt to the bond market. Ten-year Treasury yields jumped nearly a full percentage point by December on anticipation that his tax-cut plans would spur the economy and prod the Fed to speed up its rate hikes.
While in office, his comments and social-media posts sometimes sent ripples through the markets. In 2017, for example, Puerto Rico bonds tumbled when he suggested that the island\u2019s debt would need to be erased completely after it was devastated by a hurricane \u2014 only to rebound once traders realized the issue would remain in the hands of the court already overseeing its bankruptcy.
Amazon.com Inc.\u2019s stock was dragged down the following year when Trump railed against the retailer\u2019s shipping arrangements with the US Postal Service following a report he was \u201cobsessed\u201d with going after the company. In August 2019, US stocks were whipsawed repeatedly by his threats to sharply escalate a trade war with China, helping set off up-or-down moves of more than 1% in the S&P 500 during half of that month\u2019s trading sessions. The spat also moved currency markets \u2014 one corner where hedge funds are active.
Even some investors with a longer-term, fundamentals-driven approach expect a political shakeup under Trump to create ways to profit.
\u201cTrump noise sometimes creates opportunities,\u201d Carol Lye, portfolio manager at Brandywine Global Investment Management in Singapore. She cited the slide in the Mexican peso in late 2016 as he pledged to build a border wall, before the currency rebounded the following year.
The US election campaign will likely draw more attention from Wall Street as Election Day gets closer and policy positions become a more prominent part of the contest.
Trump and Republicans have already made clear that they will push to renew sweeping tax cuts put in place in 2017 that are set to expire next year, though Biden and the Democrats have also indicated they want to extent at least some of them.
Trump is also expected to seek to more aggressively deport those working in the US illegally and has called for 60% tariffs on imports from China and 10% duties on those from the rest of the world. Both of those could put upward pressure on inflation, potentially resetting the market\u2019s expectations for interest-rate cuts.
Some informal Trump advisers have floated ideas about possible changes to the Fed that would give him more power over the central bank, as well. While neither he nor the campaign has endorsed doing so, such a step would almost certainly roil the bond market by fanning worries that the bank would face politically motivated pressure to cut interest rates.
\u201cYou have to address the elephant in the room, that no matter what happens in the scenario that Trump wins \u2014 everything that he says will be amplified in North America and globally,\u201d said George Boubouras, head of research at hedge fund K2 Asset Management Ltd. \u201cWe in markets love volatility \u2014 but we do try not to get too hung up on the amplified emotion that will come from a Trump presidency.\u201d<\/div>\n