On Thursday afternoon, President-elect Trump took aim at yet another car company's plans for foreign production. His latest target, Toyota, revealed plans back in 2015 to build a new manufacturing plant in Guanajuato, Mexico. Trump's tweet about the matter stated, incorrectly, that: "Toyota Motor said it will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax." This comment came just a few hours after the president of Toyota, Akio Toyoda, told The Wall Street Journal that he'd like to work with the Trump administration and that their goals were oriented in the same direction.

The article said that Trump's group had made no comments about Toyoda's statements. Within a few hours, that had changed. By the next day, Toyota's stock had dropped 0.7% before rebounding to open Friday down 0.4%.

Twitter: @CNBC

Trump's tweet looked familiar and so did the market's reaction. On Tuesday, Trump targeted another auto company: "General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!" Following that threat, GM saw only a small and brief drop in stock price.

On the same day, however, Ford took advantage of the attention to domestic manufacturing and announced that it would cancel plans for its new plant in Mexico, instead focusing the money on its existing efforts in Michigan. Their stock jumped 2.5% after the news.

While Ford celebrated gains from its announcement, other companies had already felt even more severe pain from Trump's social media machine. In December, he tweeted: "The F-35 program and cost is out of control. Billions of dollars can and will be saved on military (and other) purchases after January 20th." While that won't be proven true until his term officially begins, the company making the fighter jets immediately saw billions of dollars move. Lockheed Martin's stock fell 4% after the tweet and, almost instantly, $3.5 billion disappeared from its value.

With another tweet, announcing that he would cancel the new Boeing Air Force One order, Trump sent Boeing's stock falling 1.5% (it eventually recovered). In fact, the entire defense sector of the S&P 1500 dropped by the same percentage after his F-35 tweet.

It is totally unclear what effects Trump will have on domestic and global markets in the long run, but these instant, short-term bursts of movement triggered by 140-character messages signal a future of volatility for companies interacting with any part of Trump's plans. Whether the consequences are positive or negative for a company's market value, it is apparent that the Trump effect is becoming a strategy that companies will have to learn to play in either direction.

He will also be an important factor for investors weighing stock trades and looking for potential buys. The hit to Boeing provided a small buy window that will have already paid off for anyone brave enough to have nabbed it. Investors will have to examine more closely their portfolios' connections to the Trump administration. With such rapid market reactions already evident, Trump's Twitter account is looking like an additional and unprecedented volatility factor for 2017.
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The Federal Reserve sets the guardrails for the federal funds rate, and through that helps control the money supply for the nation.

When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.

A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.

One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.

The Federal Reserve The Federal Reserve


The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.

This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.

The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.

Getty Images/Maria Stavreva

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