It’s been frankly impossible to try and trade our energy portfolios while trying to gauge the effects of a very unpredictable Trump administration.
For example, what would have happened in the oil markets if Obama or Bush had put out a statement like THIS:
(Click to enlarge)
The Iranians have been publicly protesting the United States with burning Presidential dummies and American flags and promising the ‘mother of all wars’ since the revolution began in 1979. Still, a reaction like this from another American President would have caused an immediate three to perhaps five-dollar rally in oil, with a secondary rally dependent upon the Persian Gulf military maneuvers that would have followed.
Instead, the oil markets barely moved on Monday, relying instead on a surprise 6.1m barrel drop in inventories on Wednesday to move oil prices higher. Bottom line is, the markets have been trying their best to ignore the President and his tweets, despite their incendiary tone.
The brewing Trade War may be different, however. Not only have steel and aluminum tariffs begun to be enforced, but Trump is targeting another $500b in Chinese goods. Meanwhile the EU is planning $20 billion in tariffs should the new Trump break from EU automotive penalties fall apart, while Mexico has slated $3 billion and Canada $14 billion of reciprocal tariffs.
While Trump seems satisfied so far with his trade war, the Chinese don’t need to play…