Gold is the real ‘Trump put’

US EQUITY investors were initially optimistic about the second presidency of Donald Trump. A so-called “Trump put” was one reason for this. The assumption was that the Republican leader would tweak his policies to support the stock market if it faltered. Equities therefore had an implicit “put” – a limit on downside risk.

A decline of 6 per cent in the S&P 500 since November’s election has weakened the belief that Trump will backstop US equities. Proponents of the Trump put might argue that a bigger fall is needed to trigger any intervention.

I believe the idea of a Trump put is simply one of many attempts by frightened experts to rationalise the president’s behaviour. They interpret his outbursts as unconventional expressions of a conventional political strategy. They accordingly hope expedience may temper his chaotic impulses.