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Martin Tillier

Martin Tillier

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Trading Trump’s OPEC Tweet

Trump

Oh no, here we go! This morning, Donald Trump, who seems to be constantly looking for a controversy to deflect from the gathering clouds of the Mueller investigation, decided to tweet out his opinions on the price of oil. Up to this point, the energy markets have largely been spared the need to do what I refer to as TTT (Trading Trump’s Tweets), so to understand the implications of this we need to look at how stock traders have learned to handle the occasional words of wisdom our leader shares via Twitter.

What traders in other markets have learned is that Presidential disapproval of a company is a great contra-indicator for its stock. The natural inclination when the most powerful person in the world expresses an opinion on a market or company is to take a position in line with that view. In almost every case of Trump’s tweets, however, that has proven to be the wrong move.

(Click to enlarge)

This is not a recent phenomenon. It even pre-dates the Presidency. The above chart goes back to December of 2016 when then President-elect Trump tweeted out his views of Lockheed Martin (LMT). He said that he was unhappy with cost overruns on the F-35 program, and that led to a couple of days of big declines in the stock, marked by the blue arrow. You can see what happened after that.

At around the same time there were similar tough tweets about the cost of the next Air Force One being built by Boeing (BA), and that stock also reacted negatively.…

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