Trump’s Tweets May Create Adverse Effects On The Markets, Study Suggests
President Donald Trump frequently touts positive economic indicators as proof that his time in office has been a net good for the nation. But it turns out that when the president talks — or rather, when he tweets — it may actually have a negative effect on the markets.
According to research compiled by Bank of America Merrill Lynch, days in which Trump tweets a high number of times tend to see stocks souring overall, MarketWatch reported.
The study looked at days when Trump tweeted 35 times or more, and compared them to days in which he tweeted five times or less. It looked at outcomes of stocks within the S&P 500 during those two types of days, and found that when Trump tweets a lot, generally the markets drop by an average of 9 basis points. When he’s relatively quiet on social media, stocks tend to go up by around 5 basis points.
It wasn’t clear whether the study found a causation factor between Trump’s tweets adversely affecting the markets — there’s a possibility that stocks could be dropping, and Trump could be tweeting after the fact, or that his tweets could be in response to bad market indicators.
Yet there’s also the possibility that Trump’s words cause some kind of harm to Wall Street. Last month, for instance, after Trump made negative comments about trade negotiations with China, stocks saw a sudden drop of hundreds of points, prior reporting from HillReporter.com demonstrated.
The study from Bank of America Merrill Lynch comes about as many economists predict a recession is on its way. According to the Washington Post, a recent survey found that three out of every four economists queried by the National Association for Business Economics say a recession is impending before the year 2021.
Recession fears are likely growing overall due to the trade wars with China, as well as the inverted yield curve on U.S. Treasury bonds.