The financial markets look undecided since mid-January: a rise then a fall, again and again. The same is true about the many comments that fill the press and the stock market and financial information sites.
One day, it’s a star banker who explains to you on Bloomberg that everything is fine and that there is nothing to fear. The next day, it’s a hedge fund manager who tells you on CNBC that the crash is coming and that he has a good strategy to survive and even profit from it.
In short, since US President Donald Trump decided to change the rules of the game and challenge the general liberalization of trade, stock markets do not know what direction to take and opt for a range whose support has not yet been broken like the Dow Jones Industrial Average Index (DJIA) oscillating between 23,560 points and 25,830 points.
There appears to be two different types of actors. On the one hand, manufacturers who feel that the United States has the least to lose in the event of a worsening of trade tensions.
According to Alicia Levine, Head of Global Investment Strategy at BNY Mellon Investment Management, quoted by Barron’s, “exports of goods and services account for 12% of U.S. gross domestic product (GDP), compared to 20% of GDP in China and 47% in Europe (based on eurozone economies).” On the other hand, financiers who would enjoy a sudden jump of the VIX as Goldman Sachs did in February 2018.
Meanwhile, if the rally has clearly calmed down since the beginning of the year, the stock indices remain at a very high level despite the tensions.