Wall Street, corporate America and the diplomatic world are settling on a strategy to deal with President Donald Trump’s rapidly shifting statements on critical issues like trade deals and Russia sanctions: Just ignore him.
Trump last week shocked the world by suggesting he might rejoin the giant Trans-Pacific Partnership, an 11-nation pact among nations representing 13 percent of the global economy. He reversed himself days later.
Beyond TPP, Trump in recent weeks has declared war on Amazon then not done very much about it. He settled on Russia sanctions only to ditch them, leaving American allies and members of his own administration completely befuddled.
In ordinary times, a declaration like the one Trump made about TPP would have sent stocks soaring, thrilled exporters and sent corporate strategists scrambling to assess the impact.
But none of that really happened.
Financial markets and America’s trading partners largely ignored the comments as a throwaway line, and the market wisdom proved to be correct when Trump tweeted that he did not "like the deal for the U.S," deflating the TPP trial balloon before it left the ground.
All of this has led investors, executives and diplomats to the conclusion that trying to act on any single thing Trump says or tweets is a fool’s game. The more effective strategy, these people say, is to look for trends in the broad sweep of Trump’s approach to governance and ignore all the noise.
“He’s clearly proven that he tends to shoot first and ask questions later and that is very, very difficult for anyone on Wall Street or really anywhere to navigate,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors. “You can get free traders in the administration pushing stuff like rejoining TPP then he wipes it all out with a single tweet. So what we’ve tended to do is just look at the trends from 30,000 feet and shrug off the random tweets."
In the case of Amazon, Trump roasted the company for days on Twitter at the end of March, crushing its stock price. Since then he’s only asked for a review of Post Office contracts, including the one it has with Amazon. Investors consider the review unlikely to amount to anything. Fears of a full-bore assault on the online retail giant have evaporated and its shares are climbing again.
One of the wealthiest hedge fund managers in the world, who is a Trump supporter and did not want to be identified by name criticizing the president, said trading on any single Trump comment — whether Amazon or anything else — was ill advised given how quickly he can change positions or simply move on to another subject.
“He’s gotten pretty good economic results so far doing what he’s doing,” the hedge fund manager said. “ … He’s got a style that is not really presidential and you have no idea what’s going to come out of his mouth or whether he’s just going to change his mind. He’d be better off not tweeting, but that’s not going to happen."
Some of the United States’ closest trading partners were deeply skeptical that Trump meant what he said on TPP last week, even as they emphasized that they would welcome a U.S. change of heart if Trump did decide to follow through.
Taro Aso, Japan’s finance minister, told reporters that he “would welcome” the United States' return, “if it’s true.” But he added that Trump “is a person who could change temperamentally, so he may say something different the next day," Aso said, according to a Reuters report.
In Australia, Prime Minister Malcolm Turnbull echoed the sentiment and said it would be "great" to have Washington rejoin the pact. But, he added, “we’re certainly not counting on it."
The back-and-forth nature of Trump’s policy pronouncements means that reaction to what he says is usually blunted unless it’s repeated by another official or put out through a more official channel, said Clayton Allen, vice president of special situations at Height Capital Markets.
Allen said markets increasingly look to external factors to determine how seriously to take a particular announcement — examining whether the president is "trying to use a policy pronouncement to leverage pressure or mollify some specific group with no intention to follow through."
While markets will never completely discount his tweets and off-the-cuff pronouncements, “people are coming to realize that these statements often signify nothing, and are learning to live with the sound and fury,” Allen said.
In the case of Russia, administration officials including U.N. Ambassador Nikki Haley believed the president had signed off on new Russia sanctions as part of the American response to the use of chemical weapons by the Syrian regime. Haley spoke of the sanctions on national television on Sunday.
By Monday, Trump had reportedly changed his mind and decided against the sanctions, leading his top economic adviser Larry Kudlow to suggest Haley had been confused. Haley fired back that she was not confused and Kudlow privately apologized to her.
The confusion over Russia echoed through global markets as Russian stocks trading in the U.S. and the Russian ruble initially dropped in anticipation of sanctions hurting the country’s economy. But they rebounded Monday when the White House reversed itself on the sanctions.
The whipsaw nature of the Trump presidency, in which obsessions come and go and positions change by the day, has flipped the old Wall Street maxim "buy on the rumor, sell on the news" on its head. The only way to handle Trump, investors say, is to wait for actions to become official.
“He has a tendency to fire off in all directions," Ablin said. “It’s hard to ever know what’s real."