Coronavirus: Wall Street all in as Donald Trump plays his hand

Coronavirus: Wall Street all in as Donald Trump plays his hand, by Robert Gottliebsen.

The huge rise on Wall Street — the biggest since 1933 — was no accident.

US President Donald Trump called major investment houses to tell them that he planned to take on the medical establishment and ease the clamps in the US economy after Easter [Easter Sunday is April 12]. At the same time the massive US stimulus bill looked like passing the Congress and the US Federal Reserve was out there printing money by buying US bonds, including corporate bonds.

The President’s actions were in stark contrast to the actions of UK Prime Minister Boris Johnson and what is happening in Australia where we are looking to increase the clamps and are talking about a six months shut down.

In taking these steps Trump is gambling his presidency, because if the US goes into a medical morass as a result of the easing of clamps then Joe Biden will be the next US president.

But Trump has gambled that if there is a deep recession in the US, he will lose the election anyway. …

Why the US market went up last night:

Trump and Vice President Mike Pence arranged a call with Wall Street’s top investors and hedge funds, including Third Point, Blackstone, Vista Equity, Intercontinental Exchange and Paul Tudor Jones, hedge fund manager and co-founder of JUST Capital.

The call focused on how America’s top money managers are viewing markets and the US economy. It extended to what more the Federal Reserve could do to support industries that are under pressure and how the central bank could help companies from seizing up.

Trump’s view that the US economy cannot be allowed to crash was reinforced by the views of the investment leaders.

At the end of the call, the “buy, buy” signal a went out and Wall Street surged. And once it started to move, computer-driven “buy signals” appeared from all directions. …

Price discovery? Hah, this is how it was done. But every market move requires a story, and this one is of hope:

Two existing drugs have jumped into contention as a possible cure: chloroquine and hydroxychloroquine.

President Donald Trump has called the drugs, which are used to treat malaria and other conditions, game changers, and a rush to procure the pharmaceuticals spurred several US states to take measures to prevent shortages.