BofA Says High Correlation Between Number of Trump Tweets and Stock Market Falls

If President Donald Trump wants to keep his strong stock market gains, he may want to stay off Twitter.

Days when Trump tweets a lot are associated with negative stock market returns, Bank of America Merrill Lynch said Tuesday in a report.

The brokerage’s chief equity strategist, Savita Subramanian, wrote in a note that “since 2016, days with more than 35 tweets (90 percentile) by Trump have seen negative returns (-9bp), whereas days with less than 5 tweets (10 percentile) have seen positive returns (+5bp) — statistically significant.” A basis point is 0.01 percent.

In other words, when Trump tweets more than usual, the stock market tends to fall slightly, on average.

“Trade talk, political campaigning and tweets have contributed to volatility, from China to Fed policy to tax policy,” she wrote. “And new tariffs announced in August indicate downside risk to our 2019/20 EPS growth forecasts of +2%/+7%, where indirect impacts from hits to corporate or consumer confidence could be significant.”

via CNBC

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