The Twitter accounts of US President Donald Trump, @POTUS and @realDonaldTrump. Trump posted almost 26,000 tweets in his first year in office. Photo: Bloomberg
Opinion
The View
by Richard Harris
The View
by Richard Harris
Trump’s tweets may shake financial markets, but it’s the economy that prevails
Richard Harris says America’s prolific Tweeter-in-Chief may make headlines daily, but his mini rants don’t seem to have a lasting impact on the stock market, at least while the economy remains stable
It is said that when UK prime minister Tony Blair left office, he did not how to use a mobile phone. The next generation of leaders saw US president Barack Obama not only using an iPhone but also sending out a few anodyne words on Twitter. Donald Trump has become the Tweeter-in-Chief, making daily news through his smartphone.
It was with shock and anticipation that the world discovered that his (often intemperate) 34,300 pre-presidential tweets were likely to continue. In his first year as president, he spent, according to The Boston Globe, 40 hours sending out nearly 2,600 tweets in 2017. That batting average has continued into this year, with 129 this month alone up to Wednesday morning.
Trump is one of around 70 prominent world leaders to use Twitter but he is perhaps the only one who bombards his public in the dead of night. The president fortunately does not drink – thank goodness Churchill was not a tweeter. Yet his 3am tweets rip away the veil of power exposing a brutal honesty on everything from core policymaking to legal rebuffs and personal issues. They provide a unique window to the thoughts of the man with his finger on the big button.
His first tweet after being elected in November 2016 was to say “we will come together as never before”. The next month saw attacks on protesters, crooked media (namely The New York Times, CNN and Saturday Night Live), fake news, the Democrats, celebrities, China and North Korea, and the Central Intelligence Agency and the Federal Bureau of Investigation.
It is traditional to expect pronouncements from the leader of United States to be a measured and pertinent insight into the world of politics, statesmanship and policy. Contrast the British and US position over the recent attacks on the Syrian chemical weapons factories. UK Prime Minister Theresa May took the view that the less in the public domain, the better; so she delayed a parliamentary debate on the attacks. In the post-attack debate, she was not helped when her opponents pointed out that Trump had talked about bombing Syria for a week.
The openness does not only reveal things that should be kept under wraps but also breeds a disrespect and disregard for the president. People do not know what is coming next – it may reverse the previous comments, so future statements get discounted.
A CEO of a publicly traded company could not tweet about topics that can move markets for fear of being accused of market manipulation – but who is going to tackle the president?
This is shown by the response of the stock market, which provides the absolute best assessment of fresh news. Trump has not been shy in attacking listed companies on his Twitter feed. That could possibly be seen as being borderline illegal under securities laws. A member of the Federal Reserve Board or a CEO of a publicly traded company could not tweet about topics that can move markets for fear of being accused of market manipulation – but who is going to tackle the president?
Nevertheless, Trump has tweeted sharply negative comments on listed companies as diverse as Aetna, Apple, Boeing, Humana, Intel, Lockheed Martin, Nordstrom, carmakers Ford, GM and Toyota, pharmaceuticals Pfizer and Merck, and most recently Amazon and Facebook. In many cases, billions have been instantly wiped of the market value of these companies but they have almost always recovered – often within the trading day.
In some cases, there is a kernel of truth such in as his latest on Wednesday morning: “Cities throughout our country are being cheated and treated so badly by online retailers. Very unfair to traditional tax paying stores!” However, such tweets have had little or no impact on the companies involved because they have to be backed up with action. Trump may not like Amazon, but he cannot target a single company unless the whole sector is treated in the same way.
US President Donald Trump greets Microsoft CEO Satya Nadella (left) and Amazon CEO Jeff Bezos during a meeting of the American Technology Council in June 2017 at the White House, Washington. Trump has recently been attacking Amazon on Twitter. Photo: Abaca Press/TNS
Harris’s Law of News Impact on the markets states: “Politics has a short-term impact on markets; economics has the long-term impact.” Trump has presided over one of the most successful US economies in history – in accordance with the law, no thanks to him. The market merely reflects the long-term nature of the underlying economy.
Today’s positive fundamentals allow markets to brush aside what Trump says and concentrate on what he does. An unstable environment, such as during the global financial crisis, might well be different. Real damage to futures, equities or foreign exchange could be done if a personal statement reflecting future economic policy was live tweeted during market hours. An unguarded tweet might have a large impact on an already unsteady market – and tip it over the edge.
Richard Harris is a veteran investment manager, banker, writer and broadcaster and financial expert witness. www.portshelter.com
This article appeared in the South China Morning Post print edition as: The Tweeter-in-Chief
