This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
A beat of a butterfly’s wings in China can cause a hurricane over the Pacific and the opening of one man’s Twitter account can cause a massive UK Index rally or sell-off. Especially when that man is Donald Trump.
I don’t need to explain to you who Trump is and why his words have immense influence. The US President has enormous political power and his public position gives him what Teddy Roosevelt used to call a “bully pulpit”, a public platform to advocate his agenda to the entire world. But no President until Trump had quite such a loud and persistent megaphone as this one has.
“Trump’s up and tweeting!”, announcer breathlessly exclaims over trading floor’s squawk. Buckle up, boys and girls, we are in for a wild ride! It’s time to call clients, to check positions, to make sure that whatever industry or business Trump gives an opinion on is not endangered. His word might not be the law (yet!), but even an opinion from a man such as him has the power to move shares.
Trump has an opinion on high oil prices? Better make sure your stop-loss on BP is not too far away. Trump fires another trade war salvo against China? It’s time to call clients holding positions in Mining shares before they move too far offside. All major political leaders (Merkel, May, Xi, Putin, bin Saud, etc) have the power to affect financial markets. But few of them besides Trump can have such a direct, personal impact on things that previous US Presidents always tried to steer clear of.
Next week, the Fed is releasing detailed FOMC minutes from their June 13 policy meeting. Now, the Fed is technically independent and US Presidents are not supposed to interfere with its discussions. Will Trump honour this rule, or will we see a Tweet from him about Fed’s policy of hiking interest rates? He is a property man, after all, and low interest rates are in his blood. And remember, where interest rates go, so go the currencies… and Banks… and housebuilders, and the rest of the UK Index .
If Trump fires off again about interest rates, or about leaving the WTO, or about the next unfortunate stock (though Harley seems to have survived with just a few scrapes), things can get very real, very fast for sectors and companies in Trump’s cross-hairs.
Here at Accendo Markets, keeping our clients informed about key market drivers is our daily bread. And that includes following public figures (not just Trump) and understanding which way specific stocks may move the very second they say something or his fingers hit the keyboard. And, ultimately, helping our clients position themselves in the market to benefit from these share price moves.
Does your broker keep you this up-to-date? If this sounds like something that can benefit your investments, get in touch with me and sign up for our Research and Trade ideas.
Sam Springett, Trader at Accendo Markets, 29 June 2018
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
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