Journalist: Wall Street, and the world markets, are a roller coaster that falls to lead, or rises vertiginously, according to the humor of President Trump.
GG: This is a game that puts Trump in the center of the universe. And it shows it almost as a force of nature. Destroy or create value at will. But I would say that the procession goes inside. In two days, the pressure became difficult to support. All against all. Elon Musk against Peter Navarro, the advisor who gives letter to the president in terms of commerce. Navarro against Musk. The Equity Business (Actions) of Wall Street versus the fixed income business (bonds), both with arrival at the government.
Q.: Bill Ackman of Pershing vs Howard Lutnick of Cantor Fitzgerald and also Secretary of Commerce.
GG: It is rare to see a pass of invoices like this, in public, with name and surname. It is clearly the tip of the iceberg.
Q.: What should be the fight under the surface, what is not seen.
GG: It is a lot of money to conserve parsimony. They are billion dollars that Trump destroys capriciously. But the problem is that no one is safe in such a dynamic, which knocks down the pieces as a domino. ACKMAN threw Lutnick that he knew about this tariff strategy, which has a bond business that benefited generously after the rise that imposed on the day of liberation and that his thing was a conflict of inadmissible interest.
Q.: It is difficult to say that it is not.
GG: OK. Monday, yes. But on Tuesday afternoon the bonds were already in the bonfire, following the course open by the debacle of the actions. Suddenly, everyone was dragged by the same shipwreck.
Q.: You wondered who could take the joystick to Trump. Who was it? Or what made it change your mind and light this 90 -day break in the application of reciprocal tariffs to most countries?
GG: People became very nervous, Trump said.
Q.: That is true.
GG: The best thermometer is the volume of discussions among those who supported, with greater or lesser enthusiasm, the president’s triumphal return. Both billionaire entrepreneurs and official politicians, who do not have evil passing. The discomfort of Republican legislators exerted a lot of pressure. Do not forget that the power to set tariffs belongs to Congress. Trump exercises it under the invocation of emergencies (for fentanyl and trade deficit). A handful of dissident Republicans would suffice, fearful of losing his bank, accompanied by a legion of always arranged opponents, to revoke that power.
Q.: And get the joystick.
GG: That’s how it is. In fact, there is already a bipartisan proposal of Elizabeth Warren and Roy Warden that postulates that need. “Trump is not a king, and Congress is not helpless.” And there is another similar one led by Republican Senator Chuck Grassley. And on the weekend, a Florida company -simplified- raised the unconstitutionality of these measures. Let’s say the situation was complicated by Pari Passu with the destruction of value.
Q.: Trump was cured in health. They say he made the decision after listening to Jamie Dimon, the CEO of JP Morgan. “You have to do something with tariffs,” he said.
GG: Not that Trump does nothing. But he asked for something sensible. In my opinion, the rise of long rates must have been the drop that overflowed the glass. I am sure that the Treasury Secretary, Scott Besent, must have hit the cry in the sky.
Q.: Among the people who were scared, there must have been Trump himself, or not?
GG: Three times he denied the possibility of a pause or backing. But he did, and quite fast, scared or not.
Q.: Besent pointed out that this step was part of the strategy.
GG: We are winning, Trump also says. Ok. But, I imagine that the Fed, which until now looked at the facts from the box and a lot of distance, must have begun to worry. And Besent knows the trade as not to see the growing danger. We were no longer discussing the Bear market or not, or the threat of a recession, but increasing the possibility of a credit crisis. And that is another animal, much more difficult to tame.
Q.: The uprising reaction of Wall Street is spectacular. The S&P500, +9.50%. Nasdaq, 12%. What does it mean? What was fixed everything? It seems somewhat thrown from the hairs. A 90 -day break does not ensure a solution, but the possibility of stretching this agony. Or am I wrong?
GG: If Trump enjoys being the center of attention, why he will turn the page and devote himself to boring themes. The rebound what does indicate is that there is a serious problem. And that this problem is the president. If he runs, if he is put aside, even if a serious discrepancy remains with China, prices are others. Substantially higher.
Q.: More similar to those left Biden.
GG: As is. Trump moves the joystick, and turns on and off the light in the markets. It means that the damage is relative. It is still reversible. We will surely sink into a Bear market and a recession if you do not release the controls. But if something important is broken, if we have a credit Crac, the Joystick will stop working. And the commercial discussion will go to the background. That is what you have to avoid: a credit accident. Hopefully Trump leaves him to pilot the situation from now on. He already had a lot of fun with Navarro and his troupe.
Source: Ambito
