Trump’s First Presidential Press Conference Rattles the Market

Chiron on Bloomberg right now: “stocks bounce off lows after trump leaves podium.”

Not being satirical:

bloomberg screencap

Angie says: Holy shit, I seriously thought you were being satirical.

Romie: Yep. I had to screencap it as evidence for MYSELF.

Schneider says: I think I’m gonna get a big bell and a placard and stand on street corners proclaiming the end is nigh.

Romie: The dow during the press conference:

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Kim says: Why do you think it is?  Because everyone is glued to their TV and not buying?? That sounds weird…

Michael: Because markets are only as stable as the emotions of the stockholders. Uncertainty of any kind makes the more timid elements run for cover and trump, during his speech, created a lot of uncertainty. It spiked back up as other people swoop in to buy while it’s low, and then he came out again so it all repeated.

Romie: Pretty much what Michael said, yeah. If people weren’t selling and buying, it’d be a horizontal line. But listeners get emotional and some of them (typically day traders rather than institutional investors) want to react (and react fast to get the best price) if they think the sectors they’re invested in might be in danger. Then others see the price trend and react – or, increasingly, automated trading systems kick in and amplify small movements.

Specifically, here, I’d say: Investors tuned in expecting to hear Mr. Trump’s plan to disentangle himself from any conflicts of interest with his business that might ethically compromise him. When he started talking, and throughout his initial statement, he made it very clear that he doesn’t intend to do that; doesn’t think he’s required to do that; doesn’t think anyone actually cares whether he does that; and thinks the laws were written by people who worried politicians wouldn’t have time to run a business, rather than people who worried about politicians using the office to enrich themselves.

That introduces a lot of uncertainty, not only about how Trump will govern, but whether Trump will be able to stay in office (or at the very least avoid getting bogged down in scandal and lawsuits that will make it impossible for him to govern). Business, in general, dislikes uncertainty. (So for instance stocks almost always have a rally after an election, regardless of who wins, because the question of who is running things has been answered.)

Once Trump left the podium, he was replaced by a lawyer who spoke reassuringly about ways they are going to minimize the ethical problems of this arrangement, which are not as good as anybody expected, but are at least better than the confrontational “I don’t need to do anything and could still run my business if I want” approach Trump had taken. Stocks recovered a fair part of their drop because people stopped actively selling off and others were bargain hunting and picking up the stocks.

Then he came back to answer questions, where he talked about things like repealing the ACA as soon as possible (even perhaps without an immediate replacement), which hit medical and medical-adjacent stocks hard (last I checked, they were the biggest losers on the day), and faced more questions about potential scandals.

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