The Post That Moved Markets

Just a few notes on what happened today, in chronological order.

1. Around 10:20 AM to 11:17 AM Eastern Time: A buyer showed up for call options on the S&P 500. Options expiring in the immediate future that were vastly out of the money. Options that were initially worth about $1 or $2 surged, but at the time there was no publicly available information indicating any reason to expect the market to rip higher. This was covered by Unusual Whales on Twitter. However, their post wasn’t until AFTER the announcement on Truth Social, so it wasn’t a useful trading signal. It was useful for demonstrating that someone knew what was going to be announced and used that information to trade.
2. 1:18 PM Eastern Time: President Trump’s account on Truth Social had a post to tell investors that the tariff situation was changing dramatically again:

Quick Writing Analysis

That post contains only 4 periods. It contains ZERO exclamation marks. There is only one word entered in all capital letters. It does not remotely match most of the posts from the account.

Whoever prepared that post, it was someone else. Why do I care? Well, it’s more interesting in light of the surge in option volume. That post has so many commas, it looks like it was written by a lawyer (no offense to our lawyer customers). I’m not expecting the President to write all his own posts on social media. Who has time for that? Not me! 

A 90-Day Pause

Remember a couple of days ago when there was a report that the White House was considering a 90-day pause? The market rallied. The White House denied the report. The market fell. Now we have a 90-day pause?

Can you tell what the post actually says? Let us shorten it to the most relevant section:

“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

We have a 90-day pause on all “Reciprocal Tariffs” except for China? But we also have a substantially lowered rate? But the rate is only substantially lower during that period? Does that mean instead of pausing them, we’re actually changing them to 10% for 90 days? But given how quickly things change, I’m having a hard time believing we won’t have substantial changes in under 90 days.

Conclusion

Bears will be bears. Bulls will be bulls. The volatility is making things particularly wild. Is this the end of the tariff battle with the rest of the world? We don’t know. It certainly seems positive, but it could be reversed just as easily by another post.

I’ll be working on our models for analyzing investments. I’ll also be preparing a note for subscribers on our thinking about fixed-rate / fixed-to-floating-rate / floating-rate preferred shares because changes to the projected rate of cuts by the Federal Reserve are making the analysis more complex.

President Trump has been pretty clear about his disdain for the Federal Reserve’s elevated rates. To be fair, I’ve been pretty explicit about my views on the Federal Reserve mismanaging the situation for years. Chairman Jerome Powell’s position as Chairman of the Federal Reserve expires in May 2026. I’m inclined to doubt he will be reappointed unless he drives the Federal Reserve to dramatically reduce interest rates. Lower interest rates would be a big positive for the sector.