So much for the Trump put
“If President Trump is determined to squeeze rate cuts out of the Federal Reserve, he made impressive headway this week. This CBB began with, ‘So Much for the Trump Put.’ As for the ‘Beijing put,’ a $36 billion PBOC liquidity injection was indiscernible beyond Chinese markets. Investors in U.S. securities would be wise to anticipate zero favors from China. . .With the ‘Fed put’ now in play, there are important questions to contemplate: Where’s the ‘strike price’ – what degree of market weakness will it take to compel the Fed to move – and, then, to what effect? Markets, after all, have already priced in aggressive cuts. It could very well require some ‘shock and awe’ central banking to reverse markets once panic has begun to set in. And it’s as if global safe haven bond markets are anticipating a bout of panic in the not too distant future.”
USAGOLD note: The ‘Trump put’ was a term that evolved last December at a time when the China trade negotiations had taken a turn for the better. Conditions improved in the stock market as a result. Now the ‘Trump put’ has been subtracted in grand fashion on two fronts with the potential for crisis compounded by the Mexico tariffs. So what happens now? Noland raises a number of questions along these lines in this week’s Credit Bubble Bulletin.