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Among Donald Trump’s many visitors to Trump Tower, aside from Kanye West and other celebrities, have been several big-name CEOs. Examples include Alibaba’s Jack Ma, FedEx’s Fred Smith, and SoftBank’s Masayoshi Son. And while many of them get their flashy marble-lobby photo op, they may also get something else out of the deal: big gains in their company stocks.
CNBC compiled a list of CEOs who have held one-on-one meetings with the president elect, and we found a distinct pattern. When a CEO visits Trump, the company’s stock usually rises that day and almost always does better than the overall market. Our data focuses on CEOs who had one-on-one meetings with Trump and excluded large group meetings such as the tech sector gathering in mid-December.
On average, we found that stocks tended to beat the S&P 500 by nearly a full percentage point, just for a single day. That’s a lot of monetary value seemingly for simply meeting the president-elect. It suggests that Trump has the power to move markets, and that it builds confidence for investors to know a company is on his good side.
While it’s impossible to say whether it was the meetings specifically that led to strong performances on the days the CEOs visited, the trend is clearly discernible. It’s possible that CEOs have already noticed that Trump exposure isn’t bad for stock prices, as some of their trips to Trump Tower in New York and Mar-a-Lago in Florida have been well-publicized.
It’s also possible that companies get a single-day boost because they tend to promote positive developments in their meetings with the president elect. BHP, for example, said in a statement afterwards that its CEO discussed the company’s U.S. investments, which include billions in oil and metals projects that could be helped by Trump’s proposed spending programs. Not surprisingly, BHP’s stock rose 4 percent on Tuesday, blowing away the S&P 500’s largely flat performance.
In his meeting, Alibaba CEO Jack Ma promised (perhaps unbelievably) to help create 1 million jobs in the U.S., not a bad olive branch from a company that you might otherwise expect to draw Trump’s ire. Bernard Arnault, the CEO of luxury goods maker LVMH, also told reporters that he might expand his operations in the United States.
After his meeting with Trump, Boeing CEO Dennis Muilenburg eased concerns that Trump would cancel orders for the company’s Air Force One contract (as he tweeted he may in December).
“It was a terrific conversation. Got a lot of respect for him. He’s a good man,” Muilenburg told a Time reporter after his Mar-a-Lago meeting. “We have an active 747 production line and we’re eager to get started on the program.”
With only nine days left until inauguration, we will have to wait and see if other CEOs try to use Trump Tower visits to gain attention and bumps to their stock prices. Companies may also follow BHP’s lead in putting out announcements and seeking photo-ops to generate more buzz.
Obviously this isn’t a fully detailed analysis of the longer-term patterns to those stocks, such as what happened in the days and weeks later. For now though, that’s not the point. The most important thing here is the consistent positive reaction the market has to these companies, representing multiple industry sectors.
This is going to be a trend to watch in the future. Will the pattern still hold up once Trump officially takes office? Will there be a different behavior for companies who visit Trump Tower versus the White House?
The analysis above excluded large group meetings, meeting with former CEOs, and meetings by the CEOs of subsidiaries and non-profits. A meeting between Mike Pence and UTC’s CEO was also excluded as it related to a bigger story about Carrier’s plans to keep some jobs at its Indiana plant.
A Trump spokesperson did not respond to CNBC’s request for comment.