DONALD VS THE ECONOMY:

J. P. Morgan's Marko Kolanovic released his 2019 outlook this morning]  "The risk that many market participants underestimated this year was the destabilizing impact of the US administration's trade policies...these policies might have erased up to ~10% of S&P 500 value this year."

A 10 percent reduction in the S&P 500 due to trade policy incoherence is a bold call, but it may not be far from the truth. Consider what happened Friday morning. Top White House economic adviser Larry Kudlow appeared on CNBC at 9:05 a.m. ET saying President Trump would consider extending the 90-day tariff truce with China if "good" progress was made on the negotiations.

The Dow Jones Industrial Average rose over 100 points in the following few minutes after those remarks aired.

Then, Peter Navarro, the director of the White House National Trade Council, appeared on CNN a little after 10 a.m. ET and fielded a question about whether the U.S. would walk away if China trade talks were not resolved in 90 days. Navarro answered that the U.S. would move forward with raising tariffs.

The Dow and the S&P, which were already off their highs, promptly dropped after those remarks and kept dropping.

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