On Monday, as U.S. stock futures plummeted, President Trump stated that the market sell-off was not a deliberate manipulation, and he had spoken with European and Asian leaders about tariff issues. He also mentioned that he could not predict what would happen in the markets. When asked about market performance, he said that sometimes the market has to 'take medicine'.
On Monday, U.S. stock futures fell sharply, reflecting concerns about the global economic outlook, especially the escalation of trade tensions. President Trump's remarks attempted to downplay government responsibility, emphasizing communication with other leaders, but at the same time exposed the market's anxiety over policy uncertainty.
Key Points Analysis:
Trade Policy and Market Panic
Trump hinted that trade friction remains a core issue. Previously, the U.S. imposed tariffs on multiple countries, leading to disruptions in global supply chains, rising costs for businesses, and investor concerns about the risk of economic recession.
The sharp drop in U.S. stock futures may stem from market expectations of an escalation in the trade war, such as the stalemate in U.S.-China negotiations and EU countermeasures, leading to heightened risk aversion.
Trump's 'The market needs to take medicine' theory
This metaphor may convey two layers of information:
Short-term Pain Theory: It suggests that market adjustments are a necessary process, similar to the pain before 'treatment', implying that policy goals (such as trade balance) take precedence over short-term fluctuations.
Shifting Responsibility: Attributing the drop to the market's own adjustments rather than policy consequences, downplaying the necessity of government intervention in the market.
Such remarks may further exacerbate market concerns about the unpredictability of White House policies, undermining investor confidence.
Long-term Impact of Policy Uncertainty
During Trump's tenure, the frequent use of tariffs as a negotiating tool has led to the fragmentation of global trade rules. Businesses face pressure to restructure supply chains, and capital expenditures tend to be cautious, dragging down economic growth.
The Federal Reserve's monetary policy space is limited (e.g., the effects of interest rate cuts may be offset by trade risks), and market volatility may remain high.
Deep Impact and Future Focus:
Global Market Linkage Risks: If U.S. stocks continue to be volatile, it may trigger sell-offs in Asia-Pacific and European markets, and safe-haven assets (gold, yen, U.S. Treasuries) may further strengthen.
