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Trump tweets about US jobs report before its release, breaking protocol
[WASHINGTON] President Donald Trump broke years of presidential protocol Friday morning with a tweet that signalled a strong jobs report was on its way from the Labor Department, an hour before the report was released.
While the White House brushed off any notion that Mr Trump had crossed a line, legal experts said the tweet raised possible insider trading concerns and economists said it was a blatant misuse of presidential power.
The Bureau of Labor Statistics routinely releases its monthly employment report on the first Friday of the month. The night before, under long-standing tradition, the president and several senior administration officials — including the Treasury secretary and the chairman of the Council of Economic Advisers — are briefed on the numbers, which they are not supposed to disclose until the report is made public at 8.30am Eastern Time the next morning.
But Mr Trump, who was briefed on the numbers Thursday evening, appeared to foreshadow the strength of the latest report Friday morning on Twitter.
"Looking forward to seeing the unemployment numbers at 8:30 this morning," Mr Trump posted at 7.21am.
Social media users saw the message as evidence that Mr Trump had seen the numbers, and that they were good. Sure enough, the report showed that the economy added 223,000 jobs in May, above forecasters' expectations. The unemployment rate dipped to 3.8 per cent — the lowest level in 18 years.
White House officials downplayed the president's tweet. Larry Kudlow, the chairman of the National Economic Council, said he had shared the jobs report Thursday evening with the president, but expressed no concern with Mr Trump's tweet Friday morning.
"I don't think he gave anything away, incidentally. I think this is all according to routine, law and custom," Mr Kudlow said on CNBC.
But economists criticised Mr Trump for breaking a long-standing practice, and possibly a federal regulation.
Because it is widely known that presidents have early access to jobs numbers, and because Mr Trump has never before tweeted that he was "looking forward" to a report release, "I would be willing to bet that some people traded off of this," said Thomas O Gorman, a former Securities and Exchange Commission enforcement official who is now a partner at the law firm Dorsey & Whitney.
"The fact of the matter is, he knew it was good, it was good, and he signaled it," Mr Gorman said, referring to the number in the jobs report.
"You don't have to say, by the way, company A is going to buy company B. You can just signal it. The word selection is very clear. He knew exactly what he was doing."
A spokesman for the Securities and Exchange Commission would not comment on whether the agency was aware of any unusual market activity before the report was released. The Commodity Futures Trading Commission did not respond to a similar request for comment.
On Wall Street, where the 8.30am release on Jobs Friday is a major event for the markets each month, traders disagreed on whether the tweet actually moved prices, which fluctuate constantly and make it difficult to determine if any single event pushed them in one direction or another.
But observers also said it is clear that watching the presidential Twitter feed is now being incorporated into the ritual of preparing for the Bureau of Labor Statistics update.
"I think the markets certainly paid attention," said Aaron Kohli, a government bond market strategist at BMO Capital Markets in New York, of the president's Friday tweet. "And will do so next month should there be a tweet, or lack of one."
Many trading firms already use computers to keep track of social media traffic in the hope of garnering trading signals.
"Most sophisticated firms these days are following Twitter, and in the age of Trump, a lot of firms have trading models that are following him," said Larry Tabb, founder of the Tabb Group, a financial markets research and advisory firm.
Still, some expressed concern that the president could turn one of the most important signals about the health of the economy into a trading game that could destabilise financial markets by prompting a rapid sell-off in advance of future jobs reports if Mr Trump did not tout the upcoming release.
Before he became president and began to celebrate strong jobs reports, Mr Trump actively worked to undermine confidence in economic data. Throughout his run for the White House and even in the months before he took office, he often dismissed the reports as "fiction".
Washington has long tried to prevent market-moving data like the employment numbers from being prematurely released. In 1985, the White House Office of Management and Budget issued a regulation governing the release of embargoed federal data like the jobs report, including a requirement that employees of the executive branch not comment publicly on the data until an hour after its release.
"All employees of the executive branch who receive prerelease distribution of information and data estimates as authorised above are responsible for assuring that there is no release prior to the official release time," the regulation states.
"Except for members of the staff of the agency issuing the principal economic indicator who have been designated by the agency head to provide technical explanations of the data, employees of the executive branch shall not comment publicly on the data until at least one hour after the official release time."
It is unclear whether the regulation applies to Mr Trump, some legal experts said.
"I would be very cautious about assuming this applies to the president, who is generally not considered an employee" of the executive branch, said Adam Scales, a law professor at Rutgers University who teaches administrative law.
The Republican National Committee responded to the criticism of Mr Trump on Friday afternoon by flagging an evening speech by President Barack Obama on Feb 5, 2009, the night before the first jobs report release of Mr Obama's presidency.
The economy was shedding jobs rapidly in the depths of the Great Recession, and Mr Obama, pushing for passage of an economic stimulus bill, told a congressional Democratic retreat: "Tomorrow we're expecting another dismal jobs report, on top of the half a million jobs that were lost last month, on top of the half a million jobs that were lost the month before that, on top of the 2.6 million jobs that were lost last year."
Even before the numbers were released Friday, economists said they were stunned at the prospect that Mr Trump was giving hints about the report's content, which fast-acting traders in financial markets could seize on to place bets on an optimism-fueled market surge.
Austan Goolsbee, who served as chairman of the Council of Economic Advisers for a year during Mr Obama's first term, called Mr Trump's tweet "totally inappropriate". If he or another official had sent a tweet like the president's, he said, he would have been investigated.
"It's more than just a breakdown of a norm, this is really an abuse of the office," Mr Goolsbee said.
Other economists went further, raising the possibility that if Mr Trump was willing to give Twitter users a premature hint at the strength of report, he could also have shared the numbers with a more select group even earlier.
"President Trump was sent the jobs numbers in advance," said Jason Furman, an economist at Harvard University's Kennedy School of Government who was Mr Obama's final chairman of the Council of Economic Advisers.
"Sharing them with the public is destabilising and inappropriate. A bigger concern is if he was bragging about them privately to his friends last night — friends who could make millions on the information."
Mr Furman said that during his tenure, he briefed the president in person in the early evening if Mr Obama was in Washington, and usually gave him the numbers over a secure phone line if the president was travelling. Mr Obama also received a paper summary of the next day's major economic releases around 7pm.
Mr Furman said he and other officials took the security of the numbers seriously. When he started at the White House, Mr Furman said, he signed a memorandum of understanding with the Labor Department agreeing only to share the numbers with the handful of people authorised to see them. He said he did not believe the information was formally classified, but the staff treated it that way, discussing it via a secure line.
Letting the numbers leak, Mr Furman said, risked undermining public confidence in the integrity of economic data.