Aaaaand today the market goes swooping upwards in my off and on coverage of the market. The Dow Jones was up 2.84%, while the other two were up about as much or even more.
So what’s going on? CNN/Money attributes it to talks aimed at averting tariffs with the largest country in the world:
Stocks soared on Monday after news that American and Chinese officials are holding behind-the-scenes talks aimed at averting a trade disaster.
Only days ago, President Trump’s crackdown on China’s trade tactics and fears of retaliation sent the market to its worst week in two years.
I’m sure that covers a substantial portion of the rally, but I think there’s a bit more to the motivations behind that rally. What might that be?
President Donald Trump on Monday ordered the expulsion of 60 Russian diplomats the US identified as intelligence agents and the closure of the Russian consulate in Seattle, the most forceful action Trump has taken against Russia to date. Of those being expelled, 48 of the alleged intelligence agents work at the Russian embassy in Washington and 12 are posted at the United Nations in New York, senior administration officials said. [CNN]
See, this is actually a reasonable reaction to the outrage of poisoning a former Russian spy on British soil. What’s more, it’s part of a coordinated action with many of our alllies. For once, President Trump, or his advisors, are showing some sense in the foreign policy arena. The market, which craves predictability and sensibility from the government, got the latter, if not the former, today, and appears to have celebrated. Trump moved against a palpably hostile and aggressive Russia. That has to reassure the more politically conservative investors.
Another part of this rally may be the algorithmic trading platforms operating once again in unusual, even unknown territory, and trading up as the internal rules of the algorithm interact with a real world doing, well, odd things. I wonder if the markets have a way to measure that activity and how it impacts the movements of the market – and if those measurements are worth shit. The fact that I can’t imagine how to do that sort of measurement doesn’t mean it isn’t done.
