Until this week the state of Ivanka Trump’s clothing brand was mostly of interest to fashion bloggers. No longer. Last week, the retail chain Nordstrom decided to stop stocking her clothes after sales of the Trump fashion label tumbled. Her father took revenge via his @realDonaldTrump account. He tweeted: “My daughter Ivanka has been treated so unfairly by @Nordstrom . . . Terrible!”
This is shocking on many levels. Never mind the fact that it looks unseemly for a president to attack any individual companies via Twitter, the onslaught against Nordstrom marks the first time that President Donald Trump has used his White House pulpit to protect his family brand (rather than merely complain about a policy issue). This crosses a new, and petty, line.
But there is a second, even more important, twist to this tale, one that might offer unexpected reassurance for corporate boards. After the tweet attack, Nordstrom’s share price briefly dipped. But it ended the day 4.1 per cent higher - even though the overall Standard & Poor’s rose by just 0.1 per cent.
This is striking. And it may not be a fluke. The Financial Times has crunched data on 30 cases in which companies have been targeted by that @realDonaldTrump account. The sample size is small and the data only start on January 1. However, this limited analysis shows that Mr Trump’s tweets have had surprisingly little effect on share prices so far, irrespective of the media hullabaloo.
Yes, an assault has sometimes dented a stock: when Mr Trump complained about Toyota’s Mexican plants on January 5, for example, the Japanese company’s share price fell about 1.2 per cent in the following 24 hours; similarly, the share price of CNN’s parent company, Time Warner, tumbled about 0.65 per cent on January 25 after an attack on the news station.
But when Mr Trump criticised General Motors on January 3, the carmaker’s share price rose nearly 0.89 per cent in the first 24 hours after the market was open. When he attacked CNN on January 16, Time Warner shares rallied more than 0.77 per cent.
And while there is a little more evidence that a positive presidential tweet can boost a share price, the impact is relatively small. Fiat Chrysler and Ford, for example, enjoyed a share price rally after presidential praise. But when a Trump tweet celebrated Fox on Jan 21, the share price of its parent company, 21st Century Fox, actually fell.
One might argue it is difficult to infer too much from a mere month’s worth of data, particularly given that, overall, the markets seem to be behaving in some perverse ways. Most notably, the overall level of stock market volatility has been astonishingly low since the start of the year, even though indices of global political and economic uncertainty stand at two-decade highs. This suggests that investors are so optimistic - or complacent - about the outlook for growth, that they will shrug off any amount of bad news, including bizarre tweets.
Another caveat: no one knows whether Mr Trump will actually turn his Twitter threats into tangible actions. If he ever slaps real import tariffs on car companies with plants in Mexico, for example, that will produce a much more dramatic effect than if he merely tweets about that threat.
But leaving aside those caveats, the message from the data is clear: corporate boards do not necessarily need to press the panic button if they end up in the president’s cross hairs. Yes, the experience will be deeply unpleasant. And yes, company boards certainly need to prepare. And, unsurprisingly, most large companies have already done this by conducting practice “drills” that borrow some of the public relations lessons learnt from weathering activist attacks.
In spite of all these war games - or, more accurately, precisely because these are taking place - those tweets may be losing some of their ability to shock. Investors and companies are adapting quietly to a new paradigm.
That will not please Mr Trump - he is a man who wants to wield power, after all. Nor will it reassure people who worry about the longer-term damage to America’s reputation, and business confidence, that might be caused by these capricious tweets.
But the next time that the pre sident tries to bully a company with his @realDonaldTrump account - and there almost certainly will be a next time - corporate boards would do well to remember Nordstrom. Although the president is very powerful, there are limits to his practical and symbolic power, even if no one quite knows exactly where those limits will really lie.
