Trillion Dollar Tweets, Continued

There is no point going through all the dirty aspects of politics to gain a position of power unless you intend to use it. Some have believed Trump to be a slave to the stock market, but in rapid succession he…

  • raise tariffs on Chinese imports
  • announce escalating tariffs on Mexican imports until illegal immigration crisis abates
  • hinted he was looking at putting tariffs on Australian aluminum & other exports
  • had leaks from the justice department & FTC announcing that Facebook, Apple, Amazon and Google are all being looked into

In such a way he flipped the script & forced the Federal Reserve’s hand:

President Donald Trump’s Friday move to slap tariffs on Mexico meant “the dam broke” for economists who had been hesitating to join the market in anticipating Fed rate cuts, Goldman Sachs Group Inc.’s Jan Hatzius and his team said.

The above Bloomberg article concludes with

investing superstar Stan Druckenmiller is piling in. He said he could see the Fed funds rate going to zero in the next 18 months if the economy softens.

A separate Bloomberg article states

“When the Trump tweet went out, I went from 93% invested to net flat, and bought a bunch of Treasuries,” Druckenmiller said Monday evening, referring to the May 5 tweet from President Donald Trump threatening an increase in tariffs on China. “Not because I’m trying to make money, I just don’t want to play in this environment.”

Yesterday as there was sector rotation into value stocks I bought a bit of beaten down stocks like AbbVie, Foot Locker, Bank OZK, etc. & also traded in and out of PetMed Express 3 or 4 times. On today’s explosive open I sold out of most those positions I put on for a few hundred dollars gain each. I also sold out a small stake I had in Western Digital & a bit of AT&T. I am down to a couple boring holdings in a couple REITs & the 2 biggest pharmacy chains. If they suck I will hope on steady dividend payments until they stop sucking & if they turn up a bit more I might lighten up even more. I think I am probably a bit north of 90% cash at this point.

I am probably going to remain mostly in cash & shorter duration bonds as if the market has someone as talented & experienced as Stanley Druckenmiller sitting on his hands, it would be a bit bold for me to try to go big in such an environment.

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