Day traders and market watchers are often left wondering whether -- and by how much -- President Trump's tweets affect the market and stocks. As the president unabashedly wages trade threats and targets companies like Amazon in his Twitter feed, traders have eyed the market closely for reactions.
Now, Goldman Sachs has compiled data to pinpoint just how much tweets affect market action. Using regression analysis to test the relationship between tweets and various assets -- while controlling for the dollar and the Economic Policy Uncertainty index -- Goldman Sachs found that there wasn't much correlation between assets and tweets except for one: soybeans.
After the Trump administration imposed a 25% tariff on roughly $34 billion of Chinese goods, the Chinese government retaliated with $34 billion of US goods including soybeans. Soybean futures have plummeted to their lowest levels in decades.
The issue with soybeans, unlike many other commodities, is that supplies can not be completely rerouted and new buyers are difficult to come by, given that China is the world's largest importer of soybeans. Last year, it imported $12.4 billion worth of soybeans from the United States.
Even though China can turn to Brazil as another major producer of soybeans, its relationship with the US is big enough to make a significant impact on prices and producers. It's also big enough to be sensitive to tweets.