I noticed (awhile after the fact) in this morning action precisely what Bloomberg’s Arie Shapira noticed:

“While there may not be a clear reason why stocks reversed, the initial decline did coincide with Peter Navarro talking about the U.S. moving forward with tariff hikes if the trade talks don’t get resolved in 90 days. That clashed a bit with Larry Kudlow’s comments just half an hour earlier about Trump being willing to extend the 90-day period.”

You may recall from previous posts/videos that the market was at one point staging a nice multiple day move in November on positive trade news; that is until Navarro aggressively put the kibosh on it. His commentary appeared to inspire a swift unwinding of what was looking like a legitimate rebound. That was enough for the President to effectively nuzzle his top trade adviser. The Navarro-muzzle news, along with an optimistic tone from others leading to the Trump/Xi G20 dinner, had the market seriously threatening those previous November highs. 


It was nice, and very smart/appropriate (frankly, in my candid view, Navarro is utterly clueless), to not hear from the China-obsessed UC Irvine professor for awhile. Not surprisingly, the market did quite nicely during his silence. Another rally-inspiring headline during that time was the announcement that he wouldn’t be attending said Trump/Xi dinner.


Well, sadly, a few days before said dinner, the President changed his mind; the headline read, “Navarro to attend Trump/Xi dinner” (or words to that effect). I recall the Dow immediately dropped like 140 points on the news (could’ve been worse, actually).


And, per this morning’s news, and perhaps this morning’s selloff (add this narrative to the two I presented earlier), Navarro is presently back in business. 


Clearly, the latest volatility is all about noise and reaction, not fundamentals…