The president of the United States has always been able to move the markets.
Usually by things he has done or said. And attention must be paid by traders and other investors.
But now, the Wall Street money folks anxious to make a buck on the POTUS might be well-advised to set up Twitter alerts: because this next president has already proved able to move stocks – up or down, and sometimes both – with the use of a Tweet.
And the astute bets can turn a profit, points out analyst Peter Cohan in Forbes today.
Cohan notes that at 8:52 a.m. on Dec. 6, President-elect Trump tweeted: “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”
Boeing stock lost $2 a share before the market had even opened. And then, the stock came back quickly.
Why would that tweet have mattered financially? Why especially would it be actionable news to Boeing stockholders? Or to someone just looking for a rapid profit?
Well, says Cohan, it hits at the core of what makes Wall Street: future profits. And why would the stock price come jumping back? Maybe because the Trump tweet misstated the numbers.
"Perhaps one reason for the recovery was the gap between the $4 billion mentioned in Trump's tweet and the actual amount of the contract – $170 million over 10 years — which represents 0.2% of Boeing's 2015 revenue of $96 billion," Cohan writes.
Smart – and quick – money could have done quite well reacting with a hasty sale on news of the tweet and then a rapid re-purchase at the bargain price later.
Cohan doesn’t recommend it. But it’s clearly an option, he said, for the quick, risk-ready guys and gals who move money around on the Street.
It isn’t a passing concern, not for this next presidency, Cohan writes. “I could be wrong but I expect Trump to keep tweeting in ways that move individual stocks, groups of stocks, and possibly stock indices around the world.”
He certainly seems inclined to shoot off a tweet anytime he wants to share his opinion on anything from late-night comedy to geo-politics. The tweets sometimes change stock prices and sometimes affect local businesses, as well. Like in Gwinnett, yes.
If you want to anticipate – and profit – from the tweets, you could look at companies planning to move jobs out of the United States, Cohan writes. "From that list, it might be possible to zero in on the ones that derive the largest proportion of their revenue from government contracts.
“And that list could be further analyzed to highlight the companies most likely to defy Trump’s efforts to keep them from moving jobs out of the country. Such companies might be candidates to sell short in anticipation of a Trump tweet.”
Or maybe sell on the tweet and buy on the re-tweet? One more way that this next president will be changing the rules – this time for the Wall Street traders.
