President Trump Continues To Ride That Wave -- January 24, 2017

NASDAQ composite just hit a new high: 12:08 p.m. Central Time, January 24, 2017. Later in the day, the S&P 500 also his an all-time high. The Dow 30 did not. The S&P 500 is a better representative of the overall market than the Dow 30. 

The Market

After almost a week of consecutive declines in the market, albeit minor declines, the market is up 103 points shortly after Trump meets with auto manufacturers and signs five pro-business EOs. This does not feel like a "dead-cat" bounce.

Interestingly, oil is solidly above $50 and trending higher -- and it started its move before Trump's second business day in office. 

I will still argue that President Trump has caught a wave, and is riding it.  Although today, one could say he is "making a wave."

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Target: E-Commerce -- Really, Really Bad News For Retailers

Jim Cramer got this exactly right.  Cramer mentioned two reasons, but the headline / story focused on only one reason why e-commerce is bad for retailers (other than Amazon). See if you can spot both reasons.

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Trump, Autos, and Border Adjustment Taxes

This was a note to a reader on this subject. This is not ready for Prime Time, and needs a lot of work, a lot of editing, but I want to get it out there, so it's not lost:

The small-car-imports-from-Mexico is quickly turning into a non-story, but could certainly produce some interesting unintended consequences:

• oil is plentiful / gasoline is cheap -- and consumers think that will last for years
• Americans are buying larger vehicles, SUVs, pickups
• apparently the margins on these small cars (regardless of where they are made) are very, very narrow
• before it's all over, one of two things will occur: auto makers will be given waivers / offsets to be allowed to bring in small cars if they offset with large-vehicle plants in the US; or, some auto manufacturers will simply quit selling small vehicles
• the only downside for an auto manufacturer to quit selling small autos in the US, I think, is this: the small autos bring a segment of the buying public into the show room; some of these small cars are "entry-level" cars for consumers that could become customers down the road for larger vehicles

But with better CAFE mileage, cheap gasoline, and good financing, it's very possible Americans will move into higher-end, higher-margin cars sooner than later if they don't have the cheap, small car option to begin with.

In other words: might the American public buy up if smaller cars were not available in the first place?

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Tariffs Vs Taxes

Not ready for Prime Time. This was a note I sent to a reader regarding tariffs and taxes. 

I don't know if you recall that the Supreme Court ruling on ObamaCare's constitutionality -- Chief Justice Roberts ruled that ObamaCare was a TAX and therefore it was constitutionally legal.

I don't know if you heard Ryan this morning, at his press conference just after Trump met with auto manufacturers. Ryan was asked about tariffs.

Ryan was very, very clear to point out the difference between tariffs and border-adjustment taxes.

The president has authority to invoke tariffs, but Ryan says these are not tariffs.

Rather, these are taxes.

This is important. If Trump tried to impose tariffs, they might be brought into court. But by calling these "auto tariffs" TAXES -- Ryan has learned from Obama -- tax policy initiated in Congress and signed by the President is not an issue for the Supreme Court.

Again, another note I sent to a reader. This note is not ready for PRIME TIME. It, too, needs to be cleaned up, edited, but I will leave that to my editor.

A small point: if these are not tariffs, all that talk about a "trade war" is pretty much moot.

By they way, I now see that if "negotiations don't work out," Mexico may walk away from NAFTA. Looks like Mexico is going to make this easy for President Trump.

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The Visual

I don't know if President Obama set the record for the number of executive orders he signed, but it was my impression that he signed most of his executive orders:

• without any announcement;
• without transparency (not on television);
• in the middle of the night, or after the end of the news cycle at the end of the week, just before he headed out to golf

I do not recall President Obama using executive orders to fulfill campaign pledges so much as out of frustration that he couldn't get his Democratically-controlled Congress to work with him.

[Later, 1:12 p.m. Central Time: the number of executive orders signed by President Obama did not come close to setting any record. See wiki. Presidents in recent history have signed 400 executive orders, plus or minus; FDR signed around 3,500 executive orders.]

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The Political Page 

The start of the Trump presidency is in sharp contrast to the start of the Obama presidency.

The flurry of activity -- meaningful, positive, making American greater than ever before -- is something I have never, never seen in 30 years of following politics. This president is laser-focused on a subject Americans can understand: jobs.

Jobs.

I'm sure we all have our own memories of the start of President Obama's presidency but the only thing I recall is the "beer summit" and Trayvon Martin. I had forgotten when they occurred.

Trayvon Martin was shot and killed February 26, 2009, almost within the first month of Obama's inauguration. That seemed to pre-occupy the president and the press until the next major event in the early Obama presidency, what came to be called the "beer summit" that occurred in July, 2009.
From The Washington Post:

The beer summit yielded fuzzy photographs of the four men drinking and eating peanuts. But the lasting impression was that the president had stepped into a divisive racial debate for which he was unprepared.

From ABC News:

At a news conference July 22, Obama inflamed the discussion when he said the Cambridge police "acted stupidly" when they arrested Gates. Two days later, Obama told reporters he wished he had "calibrated" his words differently and did not mean to malign the police. Obama said he believed Gates and Crowley had "overreacted" to events.  

One can argue that that "comment" led directly to #BlackLivesMatter. I think historians will make the connection.

Whatever political capital President Obama still had after those two events, was wasted -- and everyone agrees on this, including his own party -- was wasted on solving the health care problem. Absolutely nothing else got done.

Yes, yes, I know the economy / market was in free-fall, and there was talk of the entire US economy at risk of implosion. But, I don't viscerally remember that. I viscerally remember the "beer summit"; the president maligning the police response to a man reported to breaking into a house; and, the president stepping into the Trayvon Trevor case with some amazing comments.

President Trump's tweets not only do not compare, but already we are seeing a change in tone of these tweets as he transitions from candidate to president. It's an interesting phenomenon to watch: a businessman with no prior political experiencing transitioning into the President of the US.