Trump's big reverse? GF Securities: there are two possibilities

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Trump's big reverse? GF Securities: there are two possibilities

2017-05-20 01:47:17 217 ℃

"Leak door" suspected big reversal

On Friday, causing the market storm Trump leak incident once again broke news. First, the media exposure video show, FBI Secretary Comi vowed that the Trump campaign Russian investigation has not been hindered. He was not subjected to political pressure during the investigation.

Trump also tweets "innocence", said: "this is the history of the United States for a political figure is one of the biggest political persecution. There were so many illegal acts during the Hilary campaign and the Obama administration, but no special prosecutor was appointed! I think it hurts the United States badly, because it shows that we are divided, confused and disunity."

Trump's "innocence" and the outflow of new video seem to "leak" panic caused by the temperature drops. On Friday, as the market reacted, the dollar index rebounded from a six month low, after the dollar hit a 110.23 low on the previous trading day, before the rally hit a 111.73 high. The market closed at 111.50 on the day.

So, has been estimated as "this year's largest black swan" Trump "leak door" the impact of the past really? Observe that you think, no matter how the matter will ferment in the future, as investors, multi-dimensional depth analysis, rainy day, is the best preparation.

GF Securities macro research team is also the "leak door" broke out for the first time, combined with the previous history of the "political black swan" to do in-depth and scientific investigation, can serve as a good reference.

Event Background: "secret door" to re escalation of risk

Trump, who has been seen as a market risk since taking office, has recently renewed its "risk escalation"".

According to ABC News, in May 9th, President Trump accidentally fired the FBI chief James Comi, Trump, or the FBI investigation last year, the Russian intervention in the United States general election related. The incident has a negative impact on Trump's political influence, and to some extent, dragged down the voting schedule of health care reform bill and even promoted the tax reform plan.

After a week, ABC News exposure again, Trump leaked secrets to russia. Although Trump thought it was within the purview of the other party to talk about counterterrorism and aviation security, the US media further indicated that Trump had leaked secrets from israel.

According to the second paragraph of the fourth constitution of the United States, the president, vice president and all civil officials of the United States shall be removed from office for impeachment and conviction when they are impeached for treason, bribery or other felonies and misdemeanors. In other words, once the "secret door" incident continues to ferment, Trump may be impeached, after the incident, the market entered the stage of hedging model.

What is the trend of "secret door"? Two possible paths

GF research team believes that the impact of the secret door on the market or the existence of two transmission pathways:

First, the events continued to ferment, and Trump was eventually impeached

Probability: low

The United States Constitution gives the house the right to impeach, based on allegations of impeachment, while the Senate tries to impeach officials on impeachment charges. In short, the house of representatives from the prosecutor, the Senate is the equivalent of a jury trial.

Strictly speaking, impeachment refers only to prosecution. Impeachment is not tantamount to removal from office, and can be removed only after being convicted by the Senate trial. In the history of the United States, congress only conducted impeachment investigations against three presidents, but none of them were deposed.

In addition to the impeachment of the president, the main political and economic scandals in the United States since the 70s of the last century include the 1986 Iran gate incident, the Enron incident in 2001, the 2003 prisoner abuse incident and the prism incident in 2013.

The probability of these events will constrain the market risk preferences - bad risk assets, positive security assets, but similar events will not impact the fundamentals of the United States or the global economy, and have limited risk appetite. It is expected that if the leak door continues to ferment, the risk appetite or phase of the overseas market will turn worse, but the extent of the impact is equally limited.

Second, the impact of the incident is not sustainable

Even if the event is not sustainable, the uncertainty of Trump's own previous political record may often add a similar episode to American political and financial markets.

The index is known as panic said the S & P 500 volatility index (VIX) based on the operating rules, we believe that despite the small risk events will form stage constraints on the market risk appetite, but not the long-term operation of the market is not conducive to the.

The S & P 500 volatility index (VIX) is a small science

VIX is calculated based on the implied volatility of the S& and P500 index options. It reflects market expectations for the next 30 days. In the context of the improvement of the global economic fundamentals, since the second half of last year, the risk appetite of the global market has also been restored, the high point of VIX continues to move down.

Observe the long-term trend of VIX, it is not difficult to find its operation characteristics:

1, relatively speaking, the bottom of the VIX is more definite, but the top value is difficult to measure;

2, VIX stay at the bottom of the longer the time, the rebound may be intense, the corresponding, that is, once the market is long (excessive) in the risk-on state itself, may be a great risk.

GF Securities research team believes that in May 8th, VIX closed at 9.7, a record low after the financial crisis, close to 1993's all-time low of 9.31.

Therefore, if the next time the VIX has always been at a very low level, the market is bound to maintain the state of the risk-on market, the rapid decline in immunity, reduce the toughness, sensitivity enhancement, if the risk event, to risk-off mode switching process, or the market will overshoot.

As a result, Trump risk (or other small risk events) or markets frequently switch between risk-on and risk-off patterns.

Editor: Chen Zhijie