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Investors should discount noisy schizophrenic tweets until mid-term elections
Weekly investor research
23 July 2018
The current seasonal period of low liquidity has been accompanied by schizophrenic tweets and comments which translated in high intraday volatility in asset prices, but without major medium or long-term consequences so far. The US dollar was strengthening through the week, but reversed course to close flat vs the EUR after Trump criticised the FED’s interest rate policy, suggesting it would “hurt all we have done”. He also said, “China, the EU and others have been manipulating their currency lower (sic) while the dollar gets stronger with each passing day”.
This convoluted trading pattern based on tweeting noise, rather than economic signals, may remain with us until the dawn of mid-term elections. If you believe in the mantra: “never believe in anything until it gets officially denied”, you have a strong hint from Trump last week. When asked about the possibility of a decline on the stock market if the United States imposes a large amount of duties (USD 500bn on Chinese goods), Trump said: “If it does, it does. Look, I’m not doing this for politics”. Fade the political noise coming from DC.