Vanilla XJO Thread, page-57

Any of Trump's policies that could result in retaliation seem to have been backpedalled, or at least deferred until later. e.g. Ukraine war was going to be solved in one day, then it became 100 days, my guess is that it will be ten years. He seems to be being very careful not to risk being defeated on any issue and not to risk anything blowing up in his face so early into his new term. The imposition of tariffs runs a high risk of major retaliations. Hence, there seems to be a high probability that the tariff story will change before Feb 1 arrives, which is only a week away.

His latest idea seems to be that he can lower interest rates simply by telling the FOMC to lower rates in the USA, and by telling other countries to lower their interest rates. Is Trump bigger than the rest of the world? The answer is no. If he does succeed in forcing the FOMC to lower rates, then the USD will plummet because few if any countries will follow suit (except maybe Australia because the RBA seems to latch on to any excuse to keep rates too low.) Trump's interest rate policies are probably why the USD has been falling for the last few days.

It is possible that Trump might allow other countries more time to consider their trade relations with the USA before he imposes tariffs, for example he might suggest ways for other countries to avoid tariffs, such as lowering interest rates, but he will need to allow them a lot more time than one week to consider.

Next, I expect that it won't be long before Canute will be commanding inflation to fall, or else.

Where does this leave the XJO? There appears to be plenty of ongoing euphoria in USA markets, which flows through into the XJO remaining bullish. However, I can't make any XJO predictions because any predictions are bound to be trumped. Tight stops may be necessary to avoid XJO trading disasters.