Dave Pietramala, the legendary head coach for the Johns Hopkins Men’s Lacrosse Team, sat down for an ESPN interview last season and was asked what some may perceive to be a proverbial loaded question:
“If you weren’t coaching Hopkins, what else would you want to do?”
Coach Petro gave it some thought, sensitive to how the Hopkins faithful already believe he has the most admired job on the planet who should never think of any other role, and provided a response:
“I would want to be the lead singer in a rock-and-roll band. I’m amazed at how one person can impact an entire stadium full of people while performing on stage.”
But imagine if you had the power to control—no, influence—an action from millions around the country responsible for billions of dollars. And, what if you could have this kind of impact from a mere sixteen words posted in a Tweet?
President Trump has the ability to do just this. Other than George Washington, Trump has arguably become the most significant and emotionally moving leader in American history. The fact that he can post a message, albeit with words typed in all-caps including the always-moving exclamation point, proves that he is the puppet master of a populace sitting on the edge of their seats willing to make potential life-changing decisions about money on his every word.
“Getting VERY close to a BIG DEAL with China. They want it, and so do we!”
Trump’s urgently optimistic message, sent only minutes after today’s market open via his favorite communication tool, instantly sparked a bull rally on Wall Street, pushing the Dow Jones Industrial Average higher by over 300 points in milliseconds. As every analyst and strategist will concur, a trade deal with China will produce a remarkable resurgence in growth and, therefore, corporate earnings.
If Mr. Trump wasn’t the President and posted a message with such shocking results, he would have to answer to the Securities and Exchange Commission. Grant it, the agency would seek to know if he (or those aware of his potential public messages) profited from such posts; but the very fact that he can simply produce these kinds of market results by individually communicating rather than through a formal source has to raise an eyebrow or two for those policing securities laws.
Never mind that the country has been on the China trade seesaw many, many times and Trump’s comments are more hyperbole than real news. Stating how we’re “close” isn’t exactly a signed, sealed, delivered contract for any of us to announce “mission accomplished” with our financial goals.
I’m not suggesting the President is engaging in market manipulation, which is really defined as impacting a specific company or equity, and not a broader market average. However, it’s no secret that his words are incredibly influential and can pivot market sentiment without even trying. Similar to the ‘flash crash’ of 2010, stocks can quickly shift on news headlines. But isn’t there something dangerous about a meteoric move to the upside (or downside) based on potentially frivolous comments?
Trump clearly has the power to move the needle, however it may be best for him to use the official White House communications group when updating us on items influencing Wall Street. No question, the SEC has to be unnerved by matters pertaining to market-driven news, regardless if delivered by the President or not.
By: Todd M. Schoenberger, Senior Research Analyst at Wellington Insights and Architect of the Wellington Sector-Strategy Investment Signal
Todd Schoenberger 