How Markets Rallied On Fake News

If you had to take a guess of how Trump measures his success, you’d likely choose the performance of the U.S stock market. As of now, POTUS is sitting comfortably with the S&P500 near all-time highs. But to anyone following the business news, they know trading over the past year hasn’t been plain sailing but a volatile ride.

Sentiment of newsflow shifts rapidly from positive to negative within hours, sometimes minutes. The “markets rally on trade war optimism,” headline published by mainstream financial media yields over 17,300,000 results on Google, followed shortly by its nemesis, “trade war optimism fades as stocks fall.”

At the same time, Trump and the Chinese have figured out a way to reduce the pain of declining sentiment in both economies. By publicly releasing any positive — but totally misleading or fake — news, it causes panic buying in the stock market. But humans aren’t going to fall for the same “pump and dump” strategy over and over again. They aren’t the one’s trading. The actual buyers are computer algorithms programmed to react to news-based events.

If you went back in time and told any famous market guru, “the President’s social media account and algorithms drive market sentiment,” they’d laugh at you profusely. Yet the machines fall for the same trick every time. Any period of substantial decline is met by the Plunge Protection Team stepping in, pumping stock prices.

As news of potential impeachment keeps spreading like a wildfire, it’s puzzling why nobody brings up the fact this happens in the stock market every day. According to the Security Exchange Commission’s website, it appears the Trump administration is engaging in acts of market manipulation on a daily basis:

“Intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security.”

Now that sounds familiar.

While the narrative of a potential trade agreement stays in motion from both sides, the stock market remains bullish, thanks to algos trading stocks on the buy-side until they’re programmed to do differently. They are concealing the harsh truth for Trump: he knows deep down there’s no hope of a deal.

Traders will just have to get used to the current state of affairs as Xi Jinping and the Chinese Communist Party employ a “sit and wait” policy, choosing to delay their plans for Belt & Road, just so they outlast the current U.S President and his policies. It wouldn’t be in their best interest to contemplate any kind of deal until he’s out of office. They’ll keep talking, but only that.

China’s priorities are more in line with Democrat leaders who are in favor of a more globalist order, therefore, it makes sense for Xi to wait till after the 2020 U.S election before hinting at any kind of agreement with Trump. One thing is for sure: they won’t allow a populist U.S President to undo all the progress they’ve made over the past few decades.

And that’s exactly what a trade deal with the U.S will do.

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