Last month we referred to Chickenbecause the market has established a name to define the erratic and exasperating behavior of the Trump administration In this tariff negotiation. He Taco Tradethat translated its meaning is that “Trump is always cowed “. We have seen how to date in the most tense moments where it seemed that everything was going to break that finally Trump Take a step back. This behavior has caused many short -term operators to have established this type of operation to buy in the worst moments with the security that Trump always jumps first from the car (see comment from the previous month about the chicken), what they have baptized as the Taco Trade.
It may seem simple, but this behavior is really what has made the SP500 bounted 18% and that this May has been one of the best months in terms of profitability, the big question, however, continues to be the same, how much more is the Trump administration ready to tighten the rope? Europe and China are not yielding easily and as long as the months go by and these months do not go free to anyone.
While we have seen that business results publications have shown great strength, which has also helped decisively to this recovery since the minimum of April, as a negative part, some companies have not wanted to make their usual forecasts due to the strong uncertainty existing by the tariff war.
We cannot ignore the last movement of Standard & Poor’s Reducing the US rating, from AAA+, technically it is no surprise and both Fitch and Moody’s have taken years ago, we do not get tired of repeating that the true thermometer of the markets is the interest rates, we are seeing how the US and Japan are suffering a strong communication of these that reflect a lower demand of these bonds just in a year that must be refinance the bulk of your debt. This situation is delicate and is the key to everything, if the American administration manages to keep the debt control and its cost and renegotiate trade agreements with tariffs that can really help a budget balance will have achieved their goal, on the contrary, the danger is that they cannot control the growth of their debt and that finally this whole process leads us to an economic deceleration or even a recession.
We fear that there are still months of attending this game, will the Fed help you down types? Will we be linking extendes in tariffs or will we enter toughe MID ELECTIONS that they could take control of the cameras and leave their hands tied to implement their policies in terms of mandate and at the same time they would leave the possibilities of victory in presidential future for the Republican candidate. They always win and lose elections with the economy, remember that famous phrase coined by the campaign team in 1992 of Bill Clinton facing George Bush (father) “It is the economy stupid”, Little victory imported in the First Gulf War when Iraq invaded Kuwait, Bush He lost re -election.