Trump has been a Twitter user since 2009, amassing more than 20 million followers and issuing more than 30,000 tweets. Trump’s frequent use of Twitter in the addressing of individual companies, countries and future U.S. policy towards commerce have made his Twitter feed an influential market moving force.
A strong advocate for Twitter, Trump cites its use as a great way to address the citizens of the U.S. directly without the need for “biased” mainstream media outlets. No matter if one is a Trump supporter or critic, it is difficult to ignore the impact that his Twitter feed has had upon specific equities valuations.
On 12 December 2016, Trump tweeted the following statement regarding Boeing competitor Lockheed Martin’s commitment to develop fighter jets for the U.S. Armed Forces: “The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th.”
This statement immediately sent shockwaves through the aerospace industry, shaking the equity valuations of several key players:
- Shares of Lockheed Martin initially dropped 4%, an estimated value of US$4 billion. By the end of the trading session on 12 December, losses were cut in half, closing down 2%.
- Shares of Boeing initially dropped .72%, but traded to a positive .43% by session close.
- Shares of General Dynamics fell 2.87% before rallying to close down .94% on session close.
- Prominent defense industry ETFs PowerShares Aerospace & Defense Portfolio and iShares U.S. Aerospace & Defense both sustained losses eclipsing 1% for the session.
It is undeniable that Trump’s tweets have the ability to provide an abundance of short-term volatility to corporate equities and international currencies throughout the marketplaces of the world. Yet, Lockheed appears to have gotten worse Trump has tweeted, mostly likely since Trump has a significant amount of authority over the F-35 contract.
As time goes on, markets seem to be taking less and less notice of Trump’s tweets. More recently, General Motors only fell 1% after Trump tweeted about their factory . Toyota fell only 0.5% after the president went after their production plans. GM’s stock is roughly flat since the tweet, while Toyota is down to $ 8 a share – but that came after weak earnings.
In February, Trump tweeted his dissatisfaction with retailer Nordstrom for dropping the apparel line of his daughter. The stock seemed to take a turn after the tweet was felt, but then something interesting happened. Despite the chief executive of the largest economy in the world directly targeting the company, Nordstrom’s stock bounced right back into positive territory.
Consequently, although Trump’s tweets certainly still have the ability to shock markets, we can see that the impact of his tweets is diminishing.
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