Where did the Trump Put Go?

Has the market given up on the Trump Put? Monday marks the last trading day of the month. However, the stock market selloff on Friday has reduced the likelihood of Trump’s intervention to address the market’s steep decline. So, what is the “Trump Put”? This term generally refers to the idea that the president would step in if share prices fall drastically; it is not a physical or mechanical stop. Buying a “put” option gives an investor the right to sell a stock at a predetermined price, known as the strike price, and is typically used to hedge against downside risk. Trump, who usually boasts about the stock market’s performance over the years, has yet to take action. Meanwhile, he is insisting that the economy is not in a recession, stating, “There is no put!” “The recent selloff may have brought us closer to the strike price for both the Fed’s and Trump’s puts.” Could a market meltdown trigger the next recession? Please check out a video featuring Wolf Richter and Adam on Thoughtful Money.