How do you know when things are about to take a decisive turn for the worst?
Well I'll tell you. When you wake up to find the current President of the United States insisting he would win a "hard and fast" fist fight with the former Vice President of the United States, that's how.
Thursday was already going to be a delicate day for markets. The Trump administration was widely expected to announce new tariffs on Chinese imports, thus raising the stakes in the simmering global trade war. On top of that, everyone is still trying to discern exactly what Jerome Powell was trying to say in his debut press conference on Wednesday, a press conference that came on the heels of new Fed staff projections that one bank accurately described as "mix and match".
When taken together, those Fed projections were a bit ambiguous. Despite upgrading the economic outlook (and notably so on the unemployment path), Powell's message on growth seemingly came across as lukewarm - probably because he set the bar so damn high during his testimony on Capitol Hill late last month. Overnight, we got lackluster PMIs in Europe which raised further questions about the growth pillar of the "Goldilocks" narrative. Needless to say, a "hot" global trade war would likely undercut global growth materially and it's entirely possible it could put upward pressure on inflation as well.
So the prospect of Trump's 301 investigation threats becoming reality just after 12:00 ET on Thursday collided head on with Fed ambiguity and then with overnight data misses across Europe.
Futures were already under pressure and European stocks were already falling when Trump decided to "explain" how he imagines an actual physical altercation with Biden (who at an anti-sexual assault rally in Florida on Wednesday, said that were this high school, he would take anyone who "grabbed 'em by the pussy" out "behind the gym and beat the hell out of them") would pan out.
Ultimately, the President has determined that the former VP would "go down crying."
Now I know what you're thinking. You're thinking: "Jesus Christ, this is an absurd narrative." And you'd be right. It's surreal. But it really happened. The situation described above is what U.S. traders woke up to on Thursday: the threat of a global trade war, an ambiguous message from a rookie Fed Chair who was recently appointed by a President who was up before dawn gaming out scenarios for a fist fight with the former Vice President who yesterday suggested he would like to physically assault the man in the Oval Office because that man once said, on tape, that when you're rich, women want you to grab them by the genitals instead of say, shaking their hands.
Clearly, things didn't need to get any more dicey on Thursday - especially not ahead of the actual announcement of the above-mentioned tariffs. But they did anyway when the New York Times reported that John Dowd has decided to resign from his position as lead lawyer for the special counsel investigation because Trump refuses to listen to him.
What does Trump refuse to listen to Dowd about, you ask? Well probably everything, but specifically, Trump seems hell-bent on doing an actual face-to-face interview with Mueller (because Trump is "the best" at lying about obstruction of justice and colluding with hostile foreign powers).
Bear in mind that all of this was before lunchtime.
By the time Trump, "Bob", and Wilbur actually got around to unveiling the tariffs, stocks were already in a tailspin. I'm sure you'll go and check out the video "highlights" (scare quotes are there for a reason) for yourself, but suffice to say the best part by far was when no one told Wilbur that if he wanted, he could lower the mic to accommodate his diminutive stature.
Stocks are off the lows as I write this and unlike Wilbur (who at the press conference suggested he might be a time traveler), I cannot journey into the future and tell you how we'll close on Wall Street.
But what I can tell you (with the same degree of certainty that Robert Mueller has about whether Trump is guilty of something), is that this is what nightmares are made of if you're someone who is trying to figure out how to manage risk.
Because how in God's name do you hedge against everything outlined above?
If you have the answer to that question, then I'm sure there are tons of people who would be willing to hire you immediately.