Have Trump tweets replaced Fed speak?

Tho Bishop has a nice post, He points how US President-elect Donald Trump’s tweet handle has become the place for market players.

His Tweet handle has been actively dishing out fodder for players to speculate:

Another day, another Tweet from President-elect Trump has moved the market.

Lockheed Martin shares have taken a tumble following Trump highlighting the obvious on Twitter — the F-35 is an expensive boondoggle. This follows shares of Boeing dropping last weekfollowing a social media outburst criticizing the costs of  a new Air Force One (the stock bounced back following the Obama Administration’s assurance there was nothing to see here), as well as a number of pharmaceutical companies seeing their stock impacted following criticism of drug prices in America. Meanwhile shares of Sprint benefited after Trump held an impromptu press conference with Masayoshi Son, CEO of SoftBank which owns the US-based cellular provider.

Last week Kellyanne Conway appeared on CNBC’s Squawk Box and was asked about the power of the soon-to-be POTUS’s social media. Her response signaled that the Trump team understands the influence he wields on the market and plans to continue using it:

President-elect Trump sees that he has this massive online platform, he says about 35 million on Twitter and Facebook combined. … And he sees an opportunity to communicate right to people by cutting through the noise or the silence, whatever the case may be, through social media platforms. But you see that through tweets now he can affect industry, he affected the stock market yesterday, frankly, and he did it twice. 

This seems to be doing a better job than Fed’s forward guidance but questions whether the new President would fight the haves:

It will be interesting to see to what extent Trump’s actions match his tweets. After all, Janet Yellen was forced to recently admit to Congress that the Fed’s forward guidance had lost its potency after they continued to signal rate increases that never happened. Even Yellen’s attempt to move away from Bernanke’s preference of steering via vague wording to a more data-driven approach couldn’t revive trust in the Fed that cried wolf.

Whether it be via tweet or press release, the idea of having our economy guided via messaging is inherently absurd. This is the unfortunate product of an economy totally detached from real market prices, one where even the most cautious investors are forced out of traditional safe investments and into frothy markets, desperately following momentum to get real returns on their savings.

If President Trump is the conclusion of decades of botched economic policy enriching the financial elite at the expense of the rest of society, then financial managers investing based on exclamation point-saturated Trump tweets is the perfect illustration of just how absurd the whole game has become.

Hmmm..Interesting bit.

We are actually seeing this across quite a few countries. The Twitter handles of the leaders of most countries are driving quite a bit of economic and political activity..


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