Trump Bump becomes a nasty jolt

Last week, the market’s tranquillity was finally shattered by a “bombshell” report on Trump that sent the Vix – the main measure of US market volatility – up the most since before the US election

Commentators have been worrying for some time that US equities have been unduly calm given the scandals emanating from the Trump White House and the backdrop of geopolitical turmoil. But last week, the market's tranquillity was finally shattered by a "bombshell report on President Donald Trump's interactions with former FBI director James Comey" that sent the Vix the main measure of US market volatility up the most since before the US election, says Bloomberg's Oliver Renick. This so-called "fear gauge", which measures how expensive it is to buy insurance against big market moves, jumped by 50% in a single trading session.

"Wall Street is finally waking up to the reality in Washington," says Jeffrey Goldfarb on BreakingViews. Stockholders have been far too optimistic, clinging to the vague promises of corporate tax cuts and pump-priming investment that sparked the initial Trump Bump, while ignoring the warning signs of "dysfunction" in Washington after the failure of Trump's healthcare reform efforts and the mounting crisis about his administration's links to Russia. "The broader market is still up some 13% since Trump's election victory, translating into a valuation of 25 times earnings, a multiple hard to justify without at least factoring in ancillary benefits such as a tax cut".

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.