Thursday, March 02, 2017

Why was there such an emphasis on getting a positive coverage of President Trump's speech?

Prior to the SOTU speech, the WH went to great length to position the speech carefully in the media. A number of TV anchors were invited to the WH and spoke personally to the President and then there they were told a number of things that they obviously wanted to hear. President Trump yet again made all manner of conciliatory sounding noises and every single anchor bought the act.

During the SOTU speech however President Trump completely disavowed everything he had said to the anchors and it took them over a day to realize that they had given him all that publicity and it was all lies that he had told them.

A WH official has now admitted that this was an act of deliberate misdirection on part of the President. It was done to boost the positive appraisals of the speech.

Another curious event was that the release of a very controversial executive order was delayed after there was a massive increase in positive publicity for the President.

Taken in isolation, this doesn't mean much - we all know how attached President Trump is to adulation and that he would be perfectly on board with saying and doing whatever it took to bolster his standing in the press just so that he felt better about himself.

But there is a different issue that appeared linked.

I came across the a MarketWatch article by Nigam Arora which suggested that a number of big players had set up a short to coincide with the speech. The rationale behind the positioning the shorts was that people would notice that the SOTU would fail to meet expectations in terms of policy specifics and that in turn would bring the famed Trump rally to an end.

This move failed as the positive coverage of the SOTU caused the prices to continue their positive trend. This in turn forced the short sellers to cover their positions, and that in turn forced the algorithmic traders to drive up the prices even more and caused an artificially large rise in the stock market.

We can read this information in two ways.

1) The Trump regime is under threat from a group of traders in the market who will exploit any sign of weakness in the public perception of President Trump's viability to enrich themselves through shorts.

2) The Trump phenomena has put the market in a place where even a slight fluctuation in the hype surrounding President Trump will have catastrophic consequences for the market as a whole.

I leave it to you to choose the version that suits your narrative.


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