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By now, investors have no excuse for missing how quickly markets can turn on President Trump’s word.
On account of his posts on Truth Social, stocks turned positive once again Tuesday after Friday’s sharp sell-off.
The pattern has become familiar this year:
- Tariffs threats drag stocks lower
- Reassurance or a pivot pushes stocks back up
U.S. stocks have now recovered more than two-thirds of their losses from Friday’s decline, which marked the largest erasure of market value in six months.
Naturally, the latest dip and bounce can be traced back to President Trump in a near carbon copy of April’s “Liberation Day” episode.
Each major statement from the White House this year has coincided with a near-term bottom, and the investors who have caught on to that rhythm have made money either holding through the volatility or buying the dip.
Even novice traders have learned to monitor the president’s social media feed as a new macro indicator.
While his individual posts vary in tone and content, they continue to dictate short-term direction for asset prices as well as volatility.
Consider how the VIX — Wall Street’s fear gauge — spiked 35 percent on Friday and remained elevated before falling Tuesday, once traders gained more clarity on tariffs.
Just as he has “called” the local bottoms for asset prices, he has “called” the local tops for volatility all year.
The above and below charts are effectively inverses of one another, with swings in each index tied to Trump’s tweets.
These charts suggest that the “buy the dip” reflex should no longer be considered a contrarian move so long as it’s tied to tariff news.
Rather than reacting to policy decisions, it’s now possible in theory to front-run swings in asset prices so long as you can correctly predict how global capital pools will interpret the tone of a tweet.
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Phil Rosen
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