NEW YORK (Reuters) – The trading division of JPMorgan Chase & Co ( JPM.N ) did not buy what US President Donald Trump sold this week.
FILE PHOTO: Dealer Meric Greenbaum works at his post on the New York Stock Exchange (NYSE) floor in New York, USA, May 1
On Tuesday, key stock indexes on renewed fears more than 3 percent plunged into a trade war with China just days after Trump posted a tweet, following a steak dinner with Chinese President Xi Jinping: "Relations with China have made a big leap forward!" [19659004Itdoesnotseemlikeanythinghasactuallybeenagreedatdinner"JPMorganlaterwroteinanotetocustomerslaterthatdayaddingthatTrump'stweets"didnotappeartobecompletelyfabricatedandthengrosslyexaggeratedbecome
The mistrust of the bank's bank counter raises a broader dilemma for Wall Street investors: how serious are comments from the White House.
On the one hand, traders have known for a long time that President Trump's courageous statements do not always apply and ultimately change their effect on the securities. On the other hand, market volatility has increased in 2018, partly due to the confusion over the comments of Washington officials, making them harder to ignore.
"It's an assessment of which announcements should be taken seriously," said Maria Vassalou, portfolio manager of the $ 685 million global macro strategy from Perella Weinberg Partners.
"This situation certainly leads to unnecessary volatility and complications for the investment process."
Trump says relations with China brought a "big leap forward" – tmsnrt.rs/2QdIfjz
Trump says he is a "Tarifman" – tmsnrt.rs/2Qgrg00
It's not just Trump , Unexpected comments from White House officials such as Treasury Secretary Steven Mnuchin and economic adviser Larry Kudlow have caused a stir among traders. Each man has been named by Reuters more than two dozen times as a market driver.
Mnuchin sent the US dollar to a three-year low at the end of January after commenting at the World Economic Forum in Davos that a weaker currency was "good for us." Within hours, Trump seemed to disagree, saying he ultimately wanted a strong dollar and raised the dollar. (Graphic: tmsnrt.rs/2RIZ1Uo)
Steve Mnuchin expects stock market reaction – tmsnrt.rs/2RBiV3X
GRAPHIC: Trump and Mnuchin comment on US dollar tmsnrt.rs/2RIZ1Uo
As for Kudlow on April 4, he told reporters that it was possible that US tariffs on Chinese industrial products would never come into question and can simply be negotiating tactics. The shares rose after a statement by an unnamed White House official later said that Reuters was meant to calm the markets.
However, the stock futures fell the next day after Trump stated in a statement that he had instructed US agents to consider tariffs on additional imports worth $ 100 billion from China to punish them that they take revenge against previously announced tariffs.
CHART: S & P 500 moves as Kudlow, Bannon, and Trump charge trade wars – tmsnrt.rs/2RA9AsX
Some investors have taken their hands off the White House's volatility.
Juan Gomez, head of hedge fund firm Black Swan Quantitative Advisors, which manages assets of $ 75 million, said that he has adjusted his options-focused models over the last two years to provide greater protection against market fluctuations offer, in part, in response to the Trump administration remarks.
"Controversial headlines await you at this point," said Gomez. "It drove me crazy in the beginning, but now it's only part of what to expect."
Katina Stefanova, head of Marto Capital LP, which manages approximately $ 300 million, said her hedge fund company has created a "Trumponomics" index to hedge its broader portfolio.
Stefanova said winning their fund this year – an increase of about 7 percent in the period from 2018 to November – would be without the index, which has lately been focused on the effects of US trade wars such as Chinese technology stocks and the US Industry focused two percentage points lower companies and Asian currencies.
"You still have to take the White House very seriously," Stefanova said. "The inconsistency itself shifts the markets and influences the mood."
Other investors are simply trying to ignore the headlines of the White House.
Daniel Lowen, Chairman of Quantedge Capital USA Inc., said the $ 1.5 billion hedge fund firm's algorithms failed to anticipate market movements from Trump's government pronouncements. "We do not try to interpret what we read on the news as input for our investment decisions," Lowen said.
The stock manager of a multi-billion-dollar hedge fund manager, who asked for anonymity to speak with the media, said Trump's comments were "impossible to ignore," but the company avoids reactive trading, even if it could hurt the short-term. "We try to actually isolate our returns from market risk," the person said.
Whatever the reaction, professional investors said the White House's impact on markets is difficult to avoid. It is almost certain that the securities will move forward with statements about US trade policy, interest rate changes and other economic issues. The CBOE Volatility Index, or VIX .VIX, a common measure of market anxiety, has risen nearly 90 percent this year.
"Maybe some people are good at analyzing their words and figuring out what's up, but that's very difficult," said Fritz Folts, chief investment strategist for the 3EDGE Asset Management LP, which manages about $ 800 million. "You have to see what they do and not what they say."
Reporting by Lawrence Delevingne and Trevor Hunnicutt; Additional reporting by Lewis Krauskopf and Dan Burns in New York; Editing by Neal Templin and Lisa Shumaker