Financial markets have been caught by US President Donald Trump's announcement of the customs tariff for the main commercial partners, and investors are preparing for more upcoming fluctuations.
Here is how to trade Trump's war in a trade war outside its scope.
Arrows: “It is impossible to avoid risks”
Wall Street has been working since the pre -presidential election in November about how they were put in definitions. Investment banks have built baskets of stocks with the highest sensitivity to Trump's plans – most of them exporters such as car makers and consumer commodity companies – which allow their customers to bet on the impact of the trade war through a group of stocks.
This happened on Monday, with companies such as General Motors and Ford in the United States, Volkswagen and BMW in Europe Falling in the tariff newsBefore the gathering when they were late.
The UBS Trump Trump Truff Sosters basket, which tracks the performance of the United States, which has been negatively exposed to import definitions on commercial partners that include shares such as GAP and Harley-Davidson, decreased 6.6 per cent over Friday and Monday, which led to its gains for this year.
“The basket got Walloped on Friday and hit again (on Monday),” said Andrew Selimon, Managing Director of Morgan Stanley Investment Management. “Reduce the market from the president's will to use definitions as a negotiating mechanism.”
Some investors seem ready to escalate the weekend. According to Goldman Sachs, the hedge funds “are increasingly shortened”-or a bet against-whose names are exposed to tariffs in Europe. This basket includes Mercedes -Benz and BMW, which decreased by 3.8 percent and 2.9 percent, respectively, since Trump revealed his identification plans and drinks such as Diago, which decreased by 7.6 percent.
The percentage of bets that reach the high prices of bets at high prices in Stoxx Europe in Europe decreased to “the lowest multi -year levels”, driven by rapid sale by hedge funds since December, according to the bank.
Among the hedge funds that will run the stakes against AutOS, Ako Capital, based in London, a short Daimler, while Marshall Wace is short companies including BMW and Mercedes, and data from Breakout Point. Marshall SPA refused to comment. Ako Capital did not respond to the comment.
However, the box managers are concerned that they are very landing, given the rapid reflection of the market this week, the fact that the movements were less extreme than some expected, and the fear of losing the long emerging market.
In response to the “confusing” situation, Drew Betit, an analyst at CITI, said it is better to carry a little “everything”: growth, periodic and defensive stocks. “It is impossible to avoid risks (assets) now, so you just need to manage them.”
The Vix Index, a measure of expected fluctuations known as the “Fear scale” in Wall Street, on Monday. However, at the age of sixteen, he remains less than his average in the long run, in the sign that the nerves of investors have not given up the time.
However, the so-called “VVIX”-which measures the investor's volatility expectations in Vix- is circulated above Its average in the long run, indicating that investors are still cautious that volatility can rise.
Meanwhile, the short -term activity was silent in the options market, where merchants try to hedge against or benefit from the implications of the rapid market, or the next step for Trump Trump.
The trading of the so-called zero-contract options that end on the same day and that are used to bet on the very short-term market movements-the highest level ever reached at 1.4 trillion in the virtual value last Friday, according to the data collected by the Fishman rocks in ASYM 500.
Currencies: “very difficult”
The Canadian dollar fell to its lowest level against the US dollar since 2003 on Monday, as investors are betting on the fastest price of Canada Bank, as 386,000 future contracts are traded in Canadian dollar, which is being traded, according to the CME group.
But she then loses losses today to the news of postponing the definitions. Mexican pyseo had a similar reflection.
This has left traders in the currency market – often the first market to interact with such news – which is similarly stated by their heads on how to place them.
“The big question is whether (Trump) has obtained a major plan that includes the transfer of things to the brink of the abyss, or whether he makes them with his progress,” said Paul McKina, GAM Director of Investment.
“Try to read the mind of this man fair. It is very difficult. (You) try to deliberate on something that can go in both cases.”
At the present time, McKinama said that his team is “suffering from a little weight loss” from emerging currencies in the market and slightly length in the dollar – “not to some extent to save us really, if we got it was to decline again at the last minute. He said,” Our low view is that things are It gets worse. “
The currency options were common. JPMorgan strategists saw a “great demand” for the dollar options against the Canadian dollar and Mexican Pizo on Monday, “as the risk of effective interventions was very large for the market to ignore it.
However, many investors are committed to the power of the US dollar, the central “Trump trade” that has reshaped the markets since the electoral difficulties began to shift in favor of the Republican candidate last year.
There was more demand for “calls” in dollars – the options that give traders the right to buy the US currency at an agreed price – more than “PUTS”, options that give traders the right to sell the dollar, according to Jpmorgan.
Some say that the currency markets interact in a more volatile and unconfirmed way than it was during the first period of Trump.
“The risks of events, especially on weekends, certainly grew,” said Gary Prince, Managing Director of Financial Markets in Eng, Administrative Director of Financial Markets in Inge. The prince added that this also feeds on getting lower prices than they expect when they traded, due to the rapid market movements.
Meanwhile, some investors are searching for the least exposed to customs tariff news. “I think we have learned that we have most of our risks in deals that cannot be hostage to the main addresses,” said Mark Daving, chief investment in fixed income investment at RBC Bluebay Asset Management, who is betting on the yen against the euro.
Bonds: “prosthetic effects”
Fixed income managers try to find out whether the definitions mean high inflation, interest rates, or weaker economic growth, which may lead to more price cuts.
The immediate reaction on Monday was pricing more inflation and the slower interest rate cuts in the United States, as treasury revenues increased for two years from 4.28 percent, although it has since returned.
At the same time, investors are betting on low growth and faster interest rates in countries like Canada and the United Kingdom.
“You have compensatory effects,” said Mark Kabana, head of the United States strategy at Bank of America. “The way the price market is trading in the beginning and that expects to keep the rates (to maintain prices) for a longer period, due to the risk of inflation, but then, set some of the possibility of increasing negative effects in the future” in the future.
For Kabana, it makes sense to buy protected securities for cabinet enlargement. “They implicitly give you inflation and also help you protect from some risk of negative growth.”
At emerging market debts, at the same time, fund managers use sales in some sovereign countries for some countries caused by definition news as an opportunity to buy.
Such news “really leads to health moves in pricing assets, where we can seize the opportunity to participate in names, which recently bought Mexican debts on negative tariff addresses,” said Alaa Bushheri, head of the emerging market debts at BNP Paribas Asset Management.
Another fund manager, who asked not to be named, said that they had benefited from our last summary Provisions of customs tariffs Against Colombia to buy its debts at a lower price.
Risk or risk?
Some investors resort to other assets while searching for sanctuaries. Gold this week reached a new record of $ 2,882 per TRIY Once. “In the world of commodities, the only trade you can go to now is gold,” said Tom Price, a Panmure LibeUm analyst, said.
But Bitcoin, which some described as “digital gold”, provided less protection and Below this weekDespite early investors' expectations that Trump will prove the supporter of the sector.
Besides short -term trades, box managers feel tension from the long -term bets on the main downtown trend in risky assets that may never occur, especially given the extent of market performance in recent years.
Andrew Piece, chief investment expert in Russell Investments, said that investors “do not know enough for the next step for Trump and how the FBI's reaction will be.”
“Going to risk origins is a big call, and you have to be very confident. It is difficult to return to a neutral if the market is not correct.”
Additional reports by Costas Gourselas
