How to trade the trade war

Financial markets have been turned by US President Donald Trump, a statement on tariffs for key trade partners, and investors are closed to further instability.

Here’s how they trade again, again outside the trading war.

Shares. “Can’t avoid risk”

Wall Street has worked since the November presidential election has been positioned for tariffs. Investment banks have built a stock basket on the highest sensitivity of Trump’s plans, mainly exporters, such as Carmakers and consumer companies, which allow their customers to bet on a number of shares on a trading war.

It happened Monday with companies such as General Motors and Ford in the USA and Volkswagen and BMW in Europe Termination of tariff newsbefore they are delayed.

UBS Trump Trump Losers Basket, which follows the performance of US stocks, is negatively exposed to the import tariffs of commercial partners and stocks that can grow its interests for the year.

“The cart was taken on Friday and hit again [on Monday]”Andrew Slimon, Director of Morgan Stanley’s Investment Management.” The market underestimated the president’s will to use tariffs as a negotiating mechanism. “

Some investors seemed to be ready for the escalation of the weekend. According to Goldman Sachs, the fence has been “decreased” or bets on its basket in Europe. This basket includes Mercedes-Benz and BMW, which decreases by 3.8 percent and 2.9 percent, as Trump has discovered its tariff plans and drink companies, which make up 7.6 percent.

Long short-term ratio. The balance of bets for rising and falling into price, Stoxx Europe cars and parts index decreased to Multiyear Lows, which has been selling by selling expedited since December.

Among the betting funds against autos is the capital of AKO in London, which is a short Daimler truck, and MarshAll’s willing, BMW and Mercedes, BMW and Mercedes displays. Marshall WACE refused to comment. The capital of ACO did not respond to the comment request.

However, the Foundation’s leaders also warn that this week, taking into account the rapid repartance of the market this week, the fact that the steps are less expected and the fear of the long-lasting bull market.

In response to a “mess” situation, Crew Pettit, Citi analyst said, it is better to hold a little “everything”. Growth, cyclical and defensive reserves. “Can’t avoid risk [assets] Now, so you just have to manage it. “

On Monday, the Vix Index, Wall Street’s “Fear Meter”, which is known to instability. But on the 16th, it remains below its long-term average, with a sign that the investing nerves have not been panicked yet.

However, the so-called “vvix”, which is an event in Wicking’s pendulum, is the trade above Its long-term average, offering investors, still warns that instability can increase.

At the same time, short-term options in the options market are furious, as traders try to fence or make a profit from the prompt market’s reversals, or the next step in Trump.

Commercial zero day options – contracts that expire on the same day on the same day, which are used on extremely short-term market movement. According to data calculated last Friday in Rocky Fishman Asym 500.

Currency: “Incredibly difficult”

The Canadian dollar has fallen to the US dollar since Monday, as investors are betting on the reductions in Canada, according to CME Group, record 386,000 futures.

But then restored all the losses of the day on the delay in tariffs. Mexican peso had such a reversal.

It has left traders in the currency market. The first market will often respond to such news, similarly scratched their heads on how to position.

“The big question is whether [Trump’s] A few main programs were received, which included taking things on the edge, or he just performs it when he goes. “

“Trying to read that person’s mind is fair. A number of a number is just incredibly difficult. [You’re] trying to trade on something that could go any way. “

So far, McNama says her team is a “slightly low weight” currency and a little long time to “save us not enough to save us, it gets some criterion back again.” “The view of our low belief is that everything is worsening,” he said.

Currency options were popular. On Monday, the US dollar’s dollar options against Dollar Dollar and Mexico peso against dollar options against Mexican peso, “Since the risk of tariffs was very good for the market neglect.”

However, many investors have a bet with a bet, the central “Trump’s trade”, which transformed the markets, as election differences began to move to the Republican candidate last year.

Dollar “calls” were more needed on Monday. Options that give jacket merchants to buy the US currency at a coordinated price according to JPMorgan’s right to sell vendors.

Some say currency markets respond more unstable and vaguely than Trump during the first term of Trump.

“The risk of the event, particularly on weekends, was unequivocally grown,” said Gary Prince, the Executive Director, the Executive Director of the Ing International Markets, has escalated through uncertainty over the possible scale of tariffs. It also puts investors less attractive prices than expected when they traded, the prince thanks to fast market movements.

Some investors, meanwhile, are looking for currency pairs that are less exposed to tariff news. “I think we have learned to have most of our risk trades that do not pay orders,” said Mark Douding, a fixed investment management of RBC’s assets.

Bonds. “Reverse effects”

Fixed income leaders are trying to develop whether tariffs mean higher inflation and interest rates or weaker economic growth, which can lead to more exchange rate cuts.

The immediate reaction of the price on Monday and more slow interest rates in the United States, a two-year treasury concessions increased by 4.28%.

At the same time, investors are played on low growth and faster interest rates such as Canada and the UK.

“You are affecting the opposite,” said Mark Kabana, the head of the US dollar’s bank’s bank’s bank. “Evaluation market at first sold to wait for Fed [to keep rates] For a longer time, due to inflation risks, but later inject certain major probability of growth effects. “

For CABANA, it makes sense to buy treasury inflation on stored securities. “They obviously give you a desire to inflation, and they also help you to maintain the risks of disorderly growth.”

During the emerging market debt, at the same time, the heads of the foundation have been used to sell a sovereign debt of some countries by tariff news as a purchase.

Such news “really leads to healthy pricing assets, where we can have the opportunity to be involved in names, which are strongly based on or abuse, which has recently bought a Mexican debt on negative tariff titles.

Another manager of the event, who asked not to be not mentioned, said they had been using recent briefly Tariff threats Against Colombia to buy its debt at a lower price.

About risk or risk.

Some investors apply to other assets because they are looking for shelters. Gold bought a fresh record $ 2,882 in front of one troy ounce. “The only trade in the product in the product, which you can really go now, is gold,” said PanMure Liberum analyst Tom Price.

But Bitcoin, determined by some “digital gold” suggested less defense and is This weekDespite the early expectations of investors that Trump supports the field.

Beyond short-term transactions, the Foundation’s leaders are nervous for longer decrease in risky assets, which will never happen in recent years.

Investors “don’t just know about the next step in Trump and how to respond to Fed,” said the main investment strategy of Russell’s investment.

“Going at the bottom risk assets is a big call and you have to be very sure. It’s hard to go back to neutral if the market is not right. “

Additional report by Costas Mursella