A year ago, we didn't have a president-elect taking to Twitter to castigate people and policies not to his liking. Today, we do.
Investors may be truly tested by this new reality for the first time in the week ahead.
In the past week, Boeing shareholders experienced the power of a tweet from President-elect Donald Trump, who on Tuesday wrote on the social media platform, "Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!"
The missive was incorrect and lacked context (for instance, the program is for two planes, not one), but in the global financial-industrial marketplace, that didn't matter. Boeing's stock fell 1.5 percent in premarket trading before recovering.
In the week ahead, a simple tweet could have a much bigger impact.
On Tuesday and Wednesday, the Federal Reserve's interest rate-setting committee meets. The group is widely expected to raise its target short-term interest rate for the first time since last December.
Already, market interest rates have responded.
The 10-year U.S. Treasury interest rate is close to 18-month highs (and prices are near 18-month lows). The average 30-year, fixed-rate mortgage has jumped to its highest level of the year, according to Freddie Mac. And the stock market has been hitting new highs.
Trump's dislike for the central bank and its chair, Janet Yellen, is well-known. During the first presidential debate, Trump accused Yellen of being "political by keeping the interest rates at this level."
An interest rate rise in the week ahead would be a concrete message by Yellen's Fed that it is growing more confident the American economy is picking up steam. This is not the narrative Trump told voters on his way to victory.
A 140-character tweet is a blunt instrument, and should the president-elect take to Twitter after the Fed's decision is announced Wednesday afternoon, the market will be watching.
