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 week following 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.
While some are rightfully horrified at the idea of bulls and bears being unleashed via Twitter, this is essentially a blunter version of the “forward guidance” policy of Ben Bernanke. While a tweet from @RealDonaldTrump is far more entertaining than an John Hilsenrath article explaining what a Fed press release REALLY means, the end result is the same: the market being steered purely based on the words of a prominent government official (or a soon to be one.)
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.
Though it will offend the sensibilities of those in the financial media that have enjoyed casting central bankers as heroic figures following the financial crisis, their track record has shown that a building full of PhD’s is no better equipped to pick winners and losers in the economy than a former reality star sitting in his luxurious Trump Tower suite.
Of course Trump has more weapons at his disposal than those at the Fed, a reason why his tweets carry so much weight.
Next month he will inherit the most powerful executive branch in history, thanks to decades of consolidating power in the executive branch. His army of regulators and bureaucrats can ruin the lives of any business owner, or have his favor be their greatest asset. And this is precisely the problem.
We need to end the era of personality-driven policy, and return to an economy based on rewarding real production and the creation of value. This can only come by decoupling the economy from politics, which requires: massive deregulation, the abolishment of programs designed to subsidize both markets and individual businesses (such as the housing GSEs or the Ex-Im Bank), and a return to sound money beyond the manipulation of policy makers — such as the gold standard.
This may sound like a broken record for anyone who listened to Ron Paul over the years, but that’s because these principles are timeless. Markets know better than anyone in New York City, regardless of their address.
The fact American policymakers still think otherwise is, as Trump may Tweet, “Sad!”
Trump sex tape comments frustrate GOP supporters
Getty Images
Donald Trump’s middle-of-the-night tweets about a beauty queen sex tape are frustrating Republican supporters, who worry once again that their candidate’s lack of discipline and temperance will hamper his campaign.
They say Trump needs to keep his focus on Democratic nominee Hillary Clinton, prepare for their second debate, on Oct. 9 in St. Louis, and quit taking the bait from Democrats.
“It’s unlikely the Miss Universe flap is hurting Trump with current supporters, but it’s hard to see how it helps grow our vote,” said one GOP lawmaker who supports Trump.
“Maybe it's quaint conventional wisdom. But it seems he would help himself to talk about the real world problems that every day voters face,” the lawmaker said.
Trump has not been able to let go his feud with former Miss Universe Alicia Machado.
In a series of tweets beginning at 3:19 a.m. on Friday and ending at 5:30 a.m., the New York billionaire sought to discredit Machado by drawing attention to tawdry details about her past, including allegations — debunked by fact-checkers — that she has filmed a “sex tape.”
Those allegations reignited Democratic attacks against Trump over his treatment of Machado just as the issue seemed ready to peter out.
Clinton already had been doing everything she could to keep the Machado story going, believing Trump’s fat-shaming of the Venezuelan would help her with both women and Hispanic voters.
She responded to Trump’s tweet-storm with her own series of tweets, calling Trump “unhinged.”
“What kind of man stays up all night to smear a woman with lies and conspiracy theories?,” Clinton tweeted.
“When something gets under Donald's thin skin, he lashes out and can't let go,” she said. “This is dangerous for a president. To Donald, women like Alicia are only as valuable as his personal opinion about their looks.”
Machado followed with a Spanish-language post on her Instagram account accusing Trump of “defamations and false accusations.”
“The attacks are slander and cheap lies generated with bad intentions and no basis that have been spread by tabloids,” Machado wrote. “This, of course, is not the first time I've faced a situation like this. Through his campaign of hate, the Republican candidate insists on discrediting and demoralizing a woman, which is definitely one of his most terrifying characteristics.”
Trump’s supporters believe he has once again been blown off course at a critical juncture in the race.
“We should be talking about the 33,000 emails,” Rep. Marsha Blackburn (R-Tenn.), a top Trump supporter and surrogate, told The Hill.
She said the GOP nominee needs to focus on Clinton’s weaknesses.
“We should be talking about the fact that the House had to do another hearing yesterday with James Comey about this issue,” she said. “We should be talking about new information on the Iran deal. We should be talking about what is happening with the Clinton Foundation and how in heaven's name two people leave the White House saying they are dead broke and a few years later they're worth several hundred million dollars and it seems like the Foundation is a conduit for that activity.”
Democrats are basking in Trump’s response, believing they’ve baited him into another ill-fated fight. It comes as the GOP nominee faces a critical stretch in which he needs to make up ground on Clinton in the polls. New surveys from Suffolk University released on Friday showed him trailing Clinton in Florida, Michigan and Nevada.
“Trump must grow his base of support to win ... and specifically he needs to grow the vote with college-educated women,” said the GOP lawmaker.
Many conservatives are angered that the media has run with the Clinton campaign’s narrative that Machado is an innocent victim in the right’s long-running war on women.
They point to media reports from the late 1990s that indicate Machado was once suspected of driving the getaway car for her boyfriend after he attempted to murder someone at a funeral.
Machado was never charged, but the judge in the case later accused her of threatening him. She dodged questions about the incident in an interview with CNN’s Anderson Cooper this week.
Fox News anchor Megyn Kelly has challenged Machado’s assertion that Trump drove her to anorexia and bulimia, reading from an old Washington Post story quoting Machado as saying she developed eating disorders before becoming Miss Universe.
Machado claims the paper made the quote up.
Trump on Friday entertained conspiracy theories bouncing around far-right websites about Machado having filmed a sex tape, as well as allegations that Clinton helped the Venezuelan become a U.S. citizen for the express purpose of attacking him at the debate.
Machado was photographed topless for Playboy and appeared in a Spanish reality TV show that featured a risqué scene of her in bed with a male contestant.
But fact-checkers have rated claims that she appeared in a sex tape as “ false,” saying that searches for Machado porn videos turn up women who look like her but are someone else.
Democrats are having a field day with the ordeal.
“I'm almost @realDonaldTrump's age, so get the urge to get up in the middle of the night, but impt safety tip: don't reach for your phone,” tweeted Clinton campaign chairman John Podesta.
And the largest super-PAC supporting Clinton, Priorities USA, resurfaced a campaign ad it ran several months earlier featuring an actor playing Trump tweeting and “zinging another loser” at 3 a.m. in the White House while ignoring an urgent call on a red ringing phone.
Trump responded over Twitter: “For those few people knocking me for tweeting at three o'clock in the morning, at least you know I will be there, awake, to answer the call!”
Ben Carson’s former campaign manager, Barry Bennett, who has advised the Trump campaign in the past, said the controversy won’t move the needle on votes but that the opportunity cost for Trump can’t be overstated.
“It’s sucking up time and time management at this point in the race is critical,” Bennett said. “By tweeting last night, he just guaranteed another day of coverage when he should be telling voters he understands all the problems they face.”
