We've all wondered for awhile what it would take for the markets to reflect the global chaos wrought by the Trump administration.
For seemingly every slapstick political blunder to come out of this neophyte White House, major indices had a uniform response of optimistic calm. And no thought fart that escaped the pursed mouth of our Commander-in-Chief could shake the certainty of traders that tax reform was right around the corner. Some days it felt like the NASDAQ was operating like a teenager spending a gap year on a tropical beach without internet doing ayahuasca from 9:30 to 4:30 every weekday.
But it seems like this morning has gifted us with the answer to our months-old question: What does it take for Trump to spook the money? Time.
That's what things looked like at 11:15am today after 24 hours of stark realization that the best-case scenario is the President tried to obstruct a federal investigation into his own campaign by accident and then fired the guy leading that investigation because "Oops." And maybe he only gave top-secret Israeli intelligence to the Russians because he didn't know it was Israeli or top-secret. Perhaps this sudden downturn is also taking into account that the least discreet and most verbally incontinent man ever to occupy the Oval Office is going to Saudi Arabia tomorrow to offer his thoughts on Islam. Speaking about faith in the birthplace of Salifism is a minefield for the most politically apt of men, so it could be geopolitically disastrous when left to man whose most politically damning moment came from volunteering to be interviewed by Lester Holt.
Let's not bullshit each other, no one trusted or liked this guy. He's an inveterate liar with a shitty personality. Donald Trump is the living embodiment of who no one wants to be seated next to at a wedding reception. What the finance people who voted for him wanted was an efficacious businessman with a myopic focus on old-school conservative pro-business policies that he would be unafraid to execute as a Beltway outsider. The gamble was that Trump would change just enough to change Washington and bolster an economy that was already surging into correction territory with a central banking system afraid to do anything until it saw full employment.
In short, it was kind of a stupid fucking bet. Wasn't it?
Donald Trump isn't changing, he's a 70-year-old man with the emotional intelligence and political acumen of a ferret smoking trucker speed. The policies he espouses are scattershot and then changeable, and he is fundamentally disinterested in anything that isn't Donald Trump. His election gave us the "Trump Bump" which was bizarre, entertaining and wildly profitable for many, but then it seems like we forgot to correct for the data point that Donald Trump is the fucking President of the United States.
The market optimism that has defined his short presidency is not just illogical, it's a circle jerk of self-harm that everyone knows isn't real. Either the market has turned into a volatility-free solipsism in order to protect itself emotionally from reality or quants have used the most politically volatile period in American history since Reconstruction to create a dreamscape of Smart Beta plays.
Or both. Or neither.
In the past weeks, famed anti-Wall Street types like Lloyd Blankfein have warned that the markets are a little too chill with what's going on, and just this morning what's left of Jack Welch went on CNBC to warn against impeaching Trump lest the quasi-good time cease to roll. While many on the left have been running around like Chicken Little that Goldman Sachs alums were influencing Trump to be more venal (like that's even possible), Trump has been listening to the advice of an 81-year-old retiree like Welch and the CEO of Goldman Sachs has been preparing for The Reckoning.
Trump's attempt at health care reform was such an epic clusterfuck that it left John Cryan feeling superior about his management skills, and his tax reform campaign has so far consisted of sending two former Goldman Sachs executives into the White House briefing room with a vague one-sheet and anguished smiles. Yet despite all that, any Joe Schmoe with access to a European broker could have made real money on binary options predicting that DJIA will close at "Meh" Monday through Friday.
We've already seen some slight rebounding since the lazy panic of early morning, but this was the biggest money shudder yet to the unignorable reality that The United States of America is being woefully mismanaged. There will be a lot of talk in the coming days and weeks that impeachment would spell doom for the markets, but would an impeachment-based correction be the worst thing for an economy showing major symptoms of Anhedonia?
And without the daily carnival of alternative facts and vacuous palace intrigue of the Trump Administration to impede actual policy-based legislation, wouldn't you feel more comfortable acting genuinely bullish? The "cash on the sidelines" might come in if this stays red, but Macron and Merkel are making Europe look suddenly less fucked, so why would that money not take a trans-Atlantic correction summer vacation or just stay on the goddamn sidelines?
Markets are not logical or necessarily reactive to global realities, but then again neither is Donald Trump.
Enjoy your lunch.