Donald Trump began his first full day in office meeting with corporate CEOs in an effort to reiterate his message of “Buy American and Hire American,” by keeping factories and jobs in America. It was a classic carrot-and-stick appeal, coupled with the power of the office to publicly shame those that dare take jobs away from the same people they expect to buy their products.

The Carrots

According to FactSet, during the 42 conference calls in the first week of the current earnings season, “Trump” and/or “administration” were cited27 times.  Not surprisingly,“tax policy” and “regulation” were mentioned more often.  Of those times, Trump’s policy was mentioned 41% of the time. It was mostly about taxes;30% of the time, it was about regulations.

This isn’t lost on President Trump who talked about cutting taxes and regulations “massively.”

S & P 500 “Trump” Policy Topics Cited 4Q16 Conference Calls
Tax Policy	11
Regulations	8
Trade Policy	6
Stimulus/Infrastructure	4
Healthcare	4
Other	3
Energy Policy	1
Fact Set

The Obama legacy on regulation is legendary, and it was his most lethal weapon in the war on capitalism. Even with three days left in his second term, former President Obama leveled businesses with $12.0 billion in regulations, including 12 that cost more than $100 million.  Over his two terms, President Obama hit businesses with more than $800 billion in additional regulations that specifically crushed manufacturing and homebuilding.

So, the notion that Donald Trump will erase 75% of regulations is music to the ears of manufacturers.  On that note,jettisoning Trans-Pacific Partnership (TPP) was mostly checking a box, but the official move sent a signal to union workers that might have broken the hold of Democrats for good. 

The Stick

Still, the confusing part is how the administration will mete out punishments for manufacturing abroad. 

Scenario A:  Companies moved factories from the United States, and then exported those same products back into the country.    

The question is whether the Trump administration would pass or fail the Trump Test?

This is low-hanging fruit, and these companies would be crushed through taxes and the red-hot glare from being publicly shamed.

Scenario B: It’s interesting the CEOs that met at the White House were led by Dow Chemical (DOW), which receives about 65% of its revenues from outside the United States. Other companies at the meeting, including Johnson & Johnson (JNJ) and International Paper (IP), also do robust business outside the United States.

3Q16 Revenue	N. America	EMEA	Asia – Pacific	Latin America	Total
Dow	$4.6 billion	$3.7	$2.4	$1.8	$12.5
JNJ	$9.4	$3.8	$3.4	$1.4*	$17.8
IP	$17.2	$2.6	$1.5	$1.1	$22.4

The question is whether they will be punished for building factories overseas to address their overseas business, and not export to the United States?

Scenario C:  Kevin Plank was in attendance yesterday; while his company and story are epiphanies of the American Dream, all the Under Armour’sgear is made in Asia, South and Central America, and Mexico.

The question is whether he would be forced to bring some of his manufacturing to America to avoid any criticism or have to deal with the brunt of a border tax?  On this subject, Iam not sure.

The meeting concluded with these corporate leaders being asked to come back in 30-days with a game plan to bring jobs back to America.  This is going to be fun to watch.

Election is Over November 8th was a heartbreaker for liberals, and made even worse by an arrogance that sought to establish ground rules for the losers, including the following: Accepting the outcome Working with the next administration No pouting As it turned out, the pundits were wrong and all those rules were tossed out the window. There have been numerous attempts to delegitimize the Trump presidency before it began, and it is only getting worse; it varies from attacking Barron Trump to hijacking a women’s event and making it an anti-Trump event the day after the inauguration. The left doesn’t have boundaries in its attacks.  This even includes personal attacks, such as the one caught on a flight in which an enraged Trump ‘hater’ had to be escorted off the plane after she berated a Donald Trump supporter. As Elizabeth Warren would say: “It’s time for liberals to put on their big-boy pants and big-girl panties and stop with insults, whining, and hypocrisy”

Today’s Session

It’s going to be hard to hit Dow 20,000 when all five Dow components that reported this morning are lower before the start of trading.  

• Johnson & Johnson (JNJ)
• Verizon (VZ)
• Travelers (TRV)
• DuPont (DD)
• Minnesota Mining & Manufacturing (MMM)

Still, there are some big earnings movers this morning.  I suspect the broad market continues to move sideways, but there isn't a sense of panic to sell or buy.  

Comments

Your sober and level-headed approach is just what the country needs. The problem is that the kool-aide drinking willfully ignorant leftwing bootlickers don't watch FBN - it's too rational for them. While Trump wrestles through the quagmire made by the Obama administration, how do we get the nation un-indoctrinated and re-educated? MSM certainly won't help. Francine Paino on 1/24/2017 10:07:04 AM

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