Mike Wilson: Asset Markets and Morgan Stanley

mike wilson: Read Escalation in U.S.-China trade war threatens global economy, poses Trump re-election risk In real life, a put option is an instrument that gives the holder the right, but not the obligation, to sell an underlying asset at a set price before a certain time a potentially valuable hedge if a bullish bet on the asset goes south, according to Market Watch. The metaphorical Trump put and the Fed put are references to the belief held by some traders that either the White House or the central bank would alter policy or otherwise take action to bolster stocks and other asset markets in the event of a shock. Related Stocks could extend fall as Trump put' and Fed put' expire, says Morgan Stanley's Mike Wilson The conventional wisdom that stock index levels provide a meaningful check on the president's trade policies has not been a valid investment thesis since early August, wrote analysts at Macquarie, in a Monday note, saying that investors learned again that there is no Trump put, but there is a Fed put. Trump early Monday did appear to calm markets, saying that Chinese authorities had been in contact with U.S. officials seeking resume trade talks even as China disputed the nature of the contacts. An important corollary to last week's events is that the strike price on the fabled Trump put may be lower than commonly believed, wrote Neil Dutta, head of economics at Renaissance Macro Research, in a Monday note. But that comes after a Friday selloff that saw the Dow Jones Industrial Average DJIA, 1.00%, Trump's favored measure of the stock market, drop more than 600 points on Friday, or 2.4%, while the benchmark S&P 500 Index SPX, 0.65% dropped 2.6%. Also see As U.S.-China trade war deepens, can Corporate America handle the uncertainty Moreover, Trump followed through on the Friday selloff by announcing a further increase in tariffs on imports from China after Friday's market close. (news.financializer.com). As reported in the news.