Nordstrom stock shrugs off Trump's tweet attack, showing he's become a paper tiger

President Trump staged another tweet attack on an American corporation on Wednesday, this time raking Nordstrom Inc. for the supposed crime of dropping his daughter Ivanka’s fashion line.

At about 10:51 a.m. New York time, Trump tweeted, “My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible!”

This attack follows Trump tweets aimed at Boeing and Lockheed Martin, but there are a few especially notable aspects to it. First, it was entirely personal: The critiques of Boeing and Lockheed were at least ostensibly related to public policy — he was questioning the cost of Defense Department procurements from those companies. But there’s no public policy aspect to whether Nordstrom continues to carry Ivanka’s merchandise, only the question of how much lucre flows into the Trump family’s pocket.

Second, this tweet was particularly incoherent. What could Ivanka’s being “a great person” have to do with Nordstrom’s business decisions, even assuming for the sake of argument that it’s true?

Third, and perhaps most important from a business standpoint, the market impact of Trump’s tweet was especially evanescent. The big retailer’s stock took a hit around the time of the tweet, falling about 0.65% to $42.47 as trading volume soared from about 6,700 shares in the minute or so before the tweet dropped to roughly a half-million shares during the four minutes that followed. But the action was over soon thereafter; by 2:01 p.m. New York time, Nordstrom was back above its pre-Trump peak. The shares closed at $44.53, a gain of more than 4% on a day when the rest of the market was essentially flat.

Nordstrom announced Feb. 2 that it was dropping Ivanka-branded shoes and handbags from its merchandise offerings starting with the spring season, which is starting now. The company attributed the decision to the brand’s poor “performance,” rather than to politics.

When Trump first started hectoring corporations by name via Twitter, we observed that his market-moving tweets were a scandal waiting to happen. There was the chance that a member of his inner circle clued in to his tweeting plans might try to trade ahead of them. Moreover, these off-the-cuff tweets signaled that Trump was insensitive to the fact that every word of a president “is parsed to the nth degree, every thought magnified to global significance, no matter how casual or careless.”

Accordingly, while it’s not uncommon for presidents to try to jawbone industries or even individual companies, it’s very unusual for a president to settle personal scores with a corporation using his bully pulpit.

But the Nordstrom tweet appears to have eradicated the line between the public interest and Trump’s interest. That’s why it was termed “outrageous” in a tweet by Norm Eisen, a former chief ethics officer for the Obama White House and the co-founder of the watchdog group Citizens for Responsibility and Ethics in Washington. Trump not only issued the tweet from his personal account, but retweeted it on his official @POTUS account.

Trump spokesman Sean Spicer illustrated the depth of the Administration’s insensitivity to conflicts of interest in his defense of the tweet. Trump is “leading this country,” he said at a press briefing Wednesday. “For people to take out their concern about his actions or his executive orders on members of his family, he has every right to stand up for his family and applaud their business activities, their success."

Criticism also came from the other side of the political divide, with Ari Fleischer, the former press secretary for George W. Bush, tweeting, “This is something a father would say. It’s not the type of thing a President of the United States should say.”

And as Kevin Drum of Mother Jones observed, there’s an aspect of commercial favoritism to the Nordstrom’s tweet that makes it especially inappropriate: Nordstrom’s was not the only company that is dropping Ivanka’s merchandise. So have Neiman-Marcus and at least four other retailers. T.J. Maxx, which earlier was reported to have dropped Ivanka merchandise, has said it has incorporated the products into its regular racks, but hasn’t taken them out of inventory.

Nordstrom’s, as it happens, has been openly critical of Trump’s immigrant travel ban. The company’s three co-presidents — brothers Blake, Peter and Erik Nordstrom — issued a memo to employees observing that their company was founded by an immigrant, their great-grandfather John W. Nordstrom, and that today it employs thousands of first- and second-generation immigrants.

The people's business, or their own? President Donald Trump and daughter Ivanka at the White House earlier this month. (Evan Vucci / AP)

Nordstrom shares reverse course and turn positive following Trump's tweet

Shares of Nordstrom seesawed Wednesday after the high-end retailer became the latest target of President Donald Trump's Twitter attacks.

The company's shares fell from session highs midmorning after Trump said his daughter, Ivanka, had been treated unfairly. His comments were in response to the department store's decision to wind down its relationship with the Ivanka Trump brand, reportedly over its performance.

"My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person -- always pushing me to do the right thing! Terrible!" Trump's Tweet said.

However, Nordstrom shares recovered their losses and ended the day 4 percent higher, after The New York Times reported that TJX, the parent company of T.J. Maxx and Marshalls, instructed its employees to remove all Ivanka Trump merchandise from featured parts of the store. The company also told employees to throw out signs referencing the brand.

Shares of TJX were slightly higher in late trading.

"The communication was intended to instruct stores to mix this line of merchandise into our racks, not to remove it from the sales floor," a spokeswoman for TJX told Times.

"We offer a rapidly changing selection of merchandise for our customers, and brands are featured based on a number of factors," the spokeswoman said.

Politics were never mentioned in Nordstrom's decision to discontinue Ivanka Trump's line. However, the chain was one of the dozens of retailers being targeted by the #GrabYourWallet campaign. That movement is calling for shoppers to boycott brands with ties to the Trump family.

A representative for Nordstrom did not immediately respond to CNBC's request for comment.

While some retailers have separated themselves from the Ivanka Trump line, others continue to carry it. A spokeswoman for Hudson's Bay confirmed to CNBC that Lord & Taylor and Saks OFF 5TH still sell the label.

"Across our banners, we aim to a deliver a strong assortment of fashion," the company said in a statement. "We respect our customers' right to choose the brands that work for them. In turn, our customers' choices inform our decisions on which merchandise we offer."

In a statement obtained by MSNBC, Rosemary K. Young, senior director of marketing at Ivanka Trump said in part: "The Ivanka Trump brand continues to expand across categories and distribution with increased customer support, leading us to experience significant year-over-year revenue growth in 2016. We believe that the strength of a brand is measured not only by the profits it generates, but the integrity it maintain."

Separately, Sen. Bob Casey, D-Pa., raised ethical concerns about Trump's tweet, tagging the independent Office of Government Ethics in a tweet. The agency has criticized the president for not divesting from his businesses or establishing a blind trust when he took office.

And earlier Wednesday, on a call with reporters, National Retail Federation CEO Matt Shay was asked about the tweet and what it could mean for the industry.

"We're living in a world with a different kind of a chief executive in the White House," he said.

"We're learning, all of us, how to work in that environment."

Shay went on to say that the trade group has been encouraged by Trump's intentions so far, particularly his role as a businessman and retailer.

He also mentioned that the organization agrees with the president's previous statement that a border adjustment tax is confusing and complicated. The retail industry has banded together to fight against that GOP proposal, which would tax imports on goods that will be sold in the U.S.

"We're trying to find ways to be aligned and be supportive," Shay said.


Nordstrom Stock Just Broke the Donald Trump Tweet Curse

Donald Trump appears to have lost the power to move markets with a single tweet—and now his Twitter attacks may even be backfiring.

After the President blasted Nordstrom (JWN, +4.09%) in a tweet Wednesday morning condemning the retailer's decision to stop selling his daughter Ivanka Trump's brand, Nordstrom stock did something nobody expected: It surged.

In what some on Wall Street are declaring the stock trader's answer to a political protest, Nordstrom stock barely flinched at President Trump's criticism, dipping less than 1% before aggressively reversing course, ending the day up more than 4%.

Nordstrom's stock price reaction runs opposite to that of other Trump tweet targets, including Lockheed Martin (LMT, +0.14%), whose shares fell 2.5%—initially swooning as much as 4%—in December when the President tweeted that its F-35 fighter jet costs were "out of control." Trump's tweet last month threatening Toyota (TM, +0.20%) with a border tax if it persisted with its plan to manufacture cars at a new plant in Mexico also swiftly tanked the automaker's stock, which closed down 0.6% that day.

But investors were hardly fazed when President Trump decried Nordstrom for treating Ivanka "unfairly," calling the department store "terrible" in a tweet just before 11 a.m. Wednesday.

Traders exalted in their newfound ability to overpower the President's market-moving attacks, perhaps for the first time. While other stocks targeted in Trump's tweets since he won the Presidential election, such as Boeing (BA, -1.62%) and General Motors (GM, +0.11%), have recovered the same day, none have had as big of an upward bounce as Nordstrom. Twitter (TWTR, +2.03%) sentiment as measured by Bloomberg, which has been shown to correlate with stock prices, spiked negative on Nordstrom only very briefly before increasingly tipping positive in the afternoon.

Some investors said they even purchased more Nordstrom stock to show their support of the retailer, after it confirmed it was dropping the Ivanka Trump clothing line. One trader dubbed the Nordstrom stock movement a rebellion, tweeting, "The #Trump Protest, now on Wall Street." Another Twitter user Kathryn Cramer, a writer and apparent retail investor, tweeted that she "bought 25 shares in solidarity."

There is, however, another explanation for Nordstrom shares' counterintuitive reaction. About eleven minutes after Trump's tweet, the National Retail Federation announced its 2017 industry forecast, anticipating retail sales would grow as much as 4.2% over last year. The optimistic outlook juiced the stocks of retailers including Macy's (M, +2.50%), which rose 2.5%; Under Armor (UAA, +2.98%), up 3%; and J.C. Penney (JCP, +5.12%), up 5%. Still, Nordstrom's stock's gain far outpaced the broader industry, with the S&P Retail Select Industry index rising only about 1.3%.

Just before the market closed Wednesday, Nordstrom itself weighed in to protest the White House's account of the incident, after press secretary Sean Spicer doubled down on the President's criticism of the retailer. Explaining its justification for no longer carrying the Ivanka Trump brand, a Nordstrom spokesperson said its decision was based on poor performance of the line over the past year, especially in the latter half of 2016. "Sales of the brand have steadily declined to the point where it didn't make good business sense for us to continue with the line for now," the Nordstrom spokesperson said in a statement, adding that it had "personally informed" Ivanka of the decision early this year.Besides politics, one other theory may account for Nordstrom stock's ability to shrug off the President: Investors have simply stopped taking his tweets as seriously as they once did.

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