Trump Fomo

When you think of unlikely friendships, the alliance between Elon Musk and Donald Trump surely stands out. These two titans, one a revolutionary entrepreneur and the other a former president have forged a unique rapport that has captivated fans and critics alike. This complex relationship has sparked significant movements in the stock market, affecting investing trends and investor behaviour.

This post will explore how this bromance has reshaped macro investing and influenced stock market dynamics. Let’s uncover this unlikely collaboration's substantial impacts on investor sentiment.

The Unexpected Friendship

Elon Musk, the CEO of Tesla and SpaceX, is known for his bold innovations and ambitious goals. Conversely, Donald Trump has established his image around assertiveness and controversial statements. From their first encounters, it was clear that their relationship thrived on a shared respect and a recognition of each other's powerful presence.

As a result of their interactions, the stock market has witnessed mind-boggling shifts. For example, an off-the-cuff remark from Trump about Tesla can lead to stock price fluctuations of 3% or more in a day, highlighting the significant influence they wield over traders and investors.

How Words Shape Markets

One of the most intriguing aspects of this bromance is how their words can trigger massive stock market shifts. Take, for example, the incident where Trump praised Tesla’s role in American job creation. Within hours, Tesla's stock soared by more than 5%. This kind of reactive movement emphasizes how sensitive the market can be to the words of these powerful figures.

Musk is equally adept at causing upheaval. His tweets about Tesla's production goals can lead to stock surges or drops of significant percentages, often leading to a flurry of analysis from investors. This back-and-forth creates unique volatility in the market, where traders must stay alert to capitalize on sudden change

The Influence of Tweets

Social media is crucial to the relationship between Musk and Trump. Their tweets can significantly affect investor confidence. Trump’s posts regarding the economy or renewable energy often result in stock movements tied to Tesla or other related companies.

For instance, when Trump tweeted support for clean energy in 2020, stocks in renewable energy firms surged by an average of 15%. Investors monitored every statement, interpreting them as signs of potential trends. The influence of their messages cannot be overstated, particularly in an age where a single post can dictate billions in market capitalization.

The Ripple Effects on Industry

The implications of Musk’s and Trump’s relationship stretch beyond individual stock prices to affect entire industries. When Musk announces plans for a new space project, competitors react swiftly. For instance, following Musk's public comments on Mars colonization, stocks of aerospace companies saw a boost of up to 10% as competitors scrambled to respond.

Such dynamic exchanges can shift entire sectors from automotive to renewables. The ripple effect is not just a theoretical concept; it reflects real-time adjustments companies make in response to influential figures in the market.

Macro Investing in the Age of Influencers

The rise of influencers has transformed macro-investing strategies to consider sentiments articulated by figures like Musk and Trump. Many investors, including myself, now closely monitor these personalities in conjunction with traditional financial metrics.

Whether praised or criticized, Musk and Trump have cemented their influence within the framework of macro investing. Their statements can reshape market trends and consumer behaviour, making them essential indicators for savvy investors.

Navigating the Market Landscape

Understanding this evolving relationship is key to success in today's marketplace. By closely observing the words and actions of Musk and Trump, investors can gain insights that may predict changes in stock prices.

It is vital to adapt to this narrative, whether it involves watching for Musk's announcements about new Tesla products or monitoring Trump's economic discussions. The ability to pivot based on their latest statements can provide a competitive edge.

Final Thoughts

Ultimately, the bromance between Elon Musk and Donald Trump goes beyond mere celebrity interactions—it has meaningful impacts on the stock market and macro investing. Their unpredictable engagements have formed a powerful phenomenon that investors need to recognize.

This alliance illustrates the collision of public perception and market behaviour. Keep a close eye on this compelling friendship; their next move could shift the market beneath our feet.

Here’s to navigating the financial world with awareness and insight—the antics of these dynamic figures can offer entertainment and strategic opportunities for informed investors.

Risk Model: 3/5 - Risk On

Although the newly tempered conditions in the Canadian market have generated a 'buy' signal, the same cannot be said of the U.S. - especially the Maga beneficiaries. Every day, another shamelessly craven CEO has headed to Mar-a-Lago to kowtow to the Mango Messiah and worship at his gilded altars (read toilets) in South Florida. Each comes away from the experience richer for it as the stock markets continue their post-election elevation. The chart of market psychology I showed last week has notched higher into euphoria territory. Perma-bulls like Tom Lee and Dan Ives are being lauded on CNBC and Bloomberg TV. Previously bearish market wags like Mike Wilson and David Rosenberg have thrown in the towel.

When something called Fartcoin has a $1bn market cap, you know we are near the top.

My preferred catalyst is the bond market, just as it was in 1987. If the now-failed rally in bond prices since the election turns into an ugly correction and we get yields in the 4.5% to 5% range, I see a 10%+ stock dip as inevitable. Remember what I said about the new positive stock/bond correlation era? It is already taking the broad market down, and only the thin veneer of mega caps is masking the growing threat of an index-level rout.

The lack of volume and breadth confirmation of this latest move is telling.

Time for a "sell-on-news" after this Trump bump.