Wall Street continues to correct, something unthinkable three months ago. The return to the White House of an ever-pro-company Donald Trump made to dream of an extension of the rise in the actions, when not in a Rally even greater. However, reality has not been so. What began to be a greater volatility before the bands of the president of the United States, resulted in a slight erosion of the contributions with the hope that the threatening announcements of the president were only a negotiation strategy. Finally, the falls have made their way to the finding that Trump continues to apply his agenda regardless of the pain in the parks. To despair of investors, what has been called the ‘Trump put’ is not appearing anywhere.
What is this concept? The first thing is to explain how the sale options (Put in English) as opposed to purchase (Call). As Ig experts explain, a PUT option is a contract that gives the buyer the right, but not the obligation to sell an asset at a certain price, before a specific expiration date. The seller, also known as the author of the option, has the obligation to sell the underlying asset, at the price agreed, known as the exercise price, if the option is executed by the buyer.
These strategists put a Simple example To understand: “Let’s say you thought that the price of an ABC company action was going to lower its current price of 30 euros, so you decide to open a PUT option with an exercise price of 25 euros. For the options on shares, each contract is equivalent to 100 shares, but the price is normally quoted for an action. When we operate with options, you always have to pay a premium. If the premium of this option was one euro per From ABC’s shares, at a market price of 20 euros, you could execute your right to sell shares for the agreed year of 25 euros an action. “
It is clear that using these options have A bassist bias. “The value of a Put option increases if the market price depreciates,” they fake from IG. The ‘charm’ of this financial derivative is to protect against a drop in action or market, so the expression ‘put’ has been used in the US when a great agent has ‘protected’ in investors avoiding a greater correction of the selective. The expression has been used fundamentally with the Federal Reserve when it has stopped the increases of interest rates or directly cut them if the suffering became very large in the bags. The metaphor began spreading When Alan Greenspan presided over the Fed (from 1987 to 2006) and the US Central Bank acted several times in this way.
Transferred to the current context, The carada ‘Trump put’ would be the decision of the US president to stop machines and stop at the moment its most aggressive measures seeing the damage they are doing to the markets. At the moment, the White House tenant is not exercising it and its speech results in the fact that the thing will continue like this. This same weekend, the president advanced that there will be turbulence in the economy while his political program is based. Going even further, he even contemplated the probability of a recession. If their comings and goings with the tariffs, as in the case of Mexico and Canada, they already caused concern, statements such as they have directly bled to Wall Street.
“The feeling of investors deteriorated further after a weekend interview with President Trump, in which he reduced importance to the market correction and refrained from discard greater tolerance of administration to market volatility in the short term in pursuit of broader economic objectives. As a result, the expectations around the market support promoted by policies – the so -called ‘Trump put’- have been recalibrated to a lower threshold than initially planned, “explains Mathieu Racheter, head of investigation of Variable Rent Strategies in the Swiss Bank Julius Baer.
This same Monday, the Variable Income suffered a strong fall, with the S&P 500 giving up 2.7% and erasing its profits after the elections, while Nasdaq fell 4%, officially entering the correction territory. Sales were more pronounced in cyclical and strong growth sectors, while defensive values offered relative stability. As a reflection of the largest market anxiety, the VIX volatility index reached an intradiary maximum of 29.6, its highest level since August 2024.
Returning to Trump’s statements about the recession, for Juan José Fernández-Figares, Link Securities Strategist of its measures, especially in what refers to tariffs, something that now does not seem so obvious that it will be so. “
Very enlightening at this point is to review the most recent statements from the Treasury Secretary, Scott Besentwhich at first the investors considered “a couple of safe hands” for the market within the controversial appointments of Trump. Besent has insisted that the main objective of the new administration is to change the model of a “hooked” economy to public spending and the debt, something that, will take its time and can be painful in the short/medium term.
“There is no sale option. Trump’s upward perspective is that if we have good policies, the markets will rise,” Besent was resounding last Friday in statements to the CNBC. During his first term, Trump closely followed the stock market and used it as a barometer to evaluate his economic performance. Now everything is different and Besent was in charge of underlineing it: “Did the Biden administration succeed? The American people did not get carried away by the market rise, but expelled the Democrats.”
By way of anecdotewithin the bleeding on Monday, the collapse of more than 15% of Tesla’s shares Amid the growing controversy around his CEO, Elon Musk, since he is Trump’s Aulic Advisor. Far from paralyzing his agenda to breathe stock market relief to his ‘friend’, the US president has limited himself to leaving a publication on social networks in which he ensures that a Tesla car will be bought.
Where is the limit
The key now is to determine, beyond the rough statements, How far will Trump fall to Wall Street. “With the last correction of the market, the positioning data suggests that investors have significantly reduced the risk, which has returned our indicator of varying income positioning to neutral territory, in line with long-term stockings. However, a deeper decrease similar to the levels observed during the 2018-2019 commercial war Of the 5,300 points, “says Racheter from Julius Baer.
Last week, before ‘Black Monday’ lived yesterday, BCA Research analysts made their own bet. In a customer report, his chief strategist in geopolitics, Matt Gertken, pointed out that the best opportunity that Trump’s government has to do what he wants is the First half of this 2025: Just out of the electoral victory, with the control of Congress by a single party, a low unemployment and the mid -period elections very far: “So that Trump convinces his commercial partners of his seriousness, he needs to have some tolerance to the falls of the actions and of the opinion surveys.”
But that should change soon, Gertken defends: “The Trump administration will destroy the Republican Party if it causes a bearish market and a recession between now and the middle of the period elections in November 2026. Trump could be willing to destroy his party in pursuit of his historical legacy and his geopolitical vision, but at least before the middle of the period of the period, we would bet on Trump It will begin to make commercial concessions when the S&P 500 has fallen around 15%. And that can happen very quickly. “
The big problem, alert from BCA, is that Trump and his cabinet may not be able to manipulate markets as well as they believe. “Increasing uncertainty and discouraging investment, they could act as a layout of dismissals and a slowdown in the economy,” Gertken warns. This gives rise to what Trump’s orders go out of hand. “It is possible that the efforts to control the Fed and cushion the impact of tariffs with tax cuts do not avoid the increase in uncertainty and loss of jobs. Meanwhile, Canada and Mexico will compromise, but China remains firm, which makes a broad commercial resolution unlikely,” the strategist also warns.
Another important point is The future of the US in NATO And how will that affect markets. “Rumors about a retreat from NATO are exaggerated, although Trump can use this threat to obtain concessions. However, legal restrictions and bipartisan opposition will limit their ability to act unilaterally. The market would collapse before a real withdrawal, while European and Japanese defense spending would shoot,” Gertken closes.
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