Post-Election

Looking At The Trump Tweet Trade

The Trump Tweet Trade. Say it five times fast.

Technology allows traders to make a profit trading any commodity, and with wave after wave of tweets from President-Elect Donald Trump, some are trying to cash in on the tweets and how they might move markets.

The Wall Street Journal reported that investors are “grappling” with Trump’s “highly visible but capricious social media presence,” which has caused a bit of tumult for thinking about future events and how they may impact various markets.

Consider the fact that Trump has tweeted, by WSJ’s count, more than 300 times since the election. In addition, he has singled out companies that are traded publicly on markets, with names among that pantheon including Ford and Boeing. In one example of market-moving impact pointed out by the financial publication, shares of Rexnord Corp., which makes gears, among other products, fell 2.4 percent in a single trading day when Trump spotlighted the firm’s plans to move some jobs to Mexico.

Large investing firms, said WSJ, are taking tweets into account as they trade, with the side impact of making banks reconsider their own restrictions on how they use social media. The tweets are also helping smaller investors find ways to make money on volatile price actions.

In one example, Mizuho Financial Group had begun offering its U.S. banking staff access to Twitter, albeit in a read-only mode, with the ban on the social media feed lifted in acknowledgement that traders should have visibility into what could be defined as information that could conceivably move markets.

The traders scrambling to jump on either side of a Trump Twitter event seem to be the purview of younger investors, and E*TRADE noted that, among 900 investors surveyed, as many as three-fifths of those aged 25–34 had traded off tweets. Thus, they have openings to jump in and out of names when bigger players are blocked due to social media restrictions (that would be the banks).

In another bit of evidence of tweetism in a brave new investment world, high-speed trading, driven by algorithms, can be stymied by language and messages conveyed in that language (i.e., subtlety befuddles computers).

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