With his 17 million followers, and his desire to tweet his every thought, President-elect Donald Trump’s Twitter feed is turning into a tip sheet.
President-elect Donald Trump issued a single tweet blasting defense contractor Lockheed Martin Corp. at 8:30 a.m. on Monday. By lunchtime, he had wiped $4 billion off the company’s market value.
Wall Street traders began dumping the company’s stock after Trump criticized its fighter jet program: “The F-35 program and cost is out of control,” he tweeted. “Billions of dollars can and will be saved on military (and other) purchases after January 20th.”
Past presidents haven’t singled out individual companies or their products for criticism or praise in the way Trump has since taking office. They’ve understood that a single utterance can move markets, and not necessarily in a good way for the general population; but that seems to be what traders are hoping for.
“This is a new type of risk, call it presidential tweet risk,” said Jack Ablin, chief investment officer at BMP Private Bank. “And it’s the largest companies that enjoy a global supply chain, relatively low tax rate and have marshaled Washington to their benefit that seem to be at the most risk. But everyone now has to keep their Twitter feed right next to their Bloomberg terminal.”
On Wall Street, a person who can move a stock is called an “axe.” Trump, with his itchy Twitter finger, is quickly emerging as the biggest axe there is. Move quickly after a Trump tweet and there are potentially millions to be made. Miss out on one, or misjudge its impact, and your portfolio could take a hit.
Of course, those inside Trump’s circle could benefit from his criticism of companies or industries if they know what they are before he tweets. But, a former Securities and Exchange Commission attorney tells Politico it’s unlikely anything could be done.
“The SEC wouldn’t touch that,” said Stephen Crimmins, a former SEC enforcement division attorney who is now with the law firm Murphy & McGonigle. “The nature of the information is not specific enough to the company, but is rather of a political nature.”