Making the Pitch for Trade
Yesterday, Intel (INTC) announced its intentions to build a $7 billion factory in Chandler, Arizona to make 7-nm chips that will power things, such as autonomous cars. While making the pitch in the Oval Office, the management admitted that this has been on the drawing board for years, but potentially lower regulations and taxes will make it a reality.
However, with the excitement about possibly creating 3,000 new American jobs, it underscores how its workforce is overwhelmingly domestic. While Intel’s revenues are overwhelmingly from outside the United States, CEO Brian Krzanich noted that it’s the fifth biggest product exporter in this country.
The CEO’s words were measured and tense, befitting what was essentially a public negotiation and peace offering.
While Intel’s got the glare of the White House spotlight, Fred Smith, CEO of FedEx (FDX) met privately with Vice President Pence, where he made his pitch for the nation to “lean into trade” by ditching the urge for protectionism instead of expanding exports.
These kinds of pleas are flying big time as ideas, such as tariffs and border taxes, are talked up in Washington D.C. The trick is not to open up overseas markets, but to make sure American producers don’t flee to low-cost jurisdictions. The low-hanging sweeteners are lower taxes and regulations, but would that be enough?
Right now, U.S. exports are gaining momentum, and that means corporate bottom lines are expanding (U.S. profits peaked at $1.7 trillion in 1Q15, around the same time export revenues peaked). High- margin services with a smaller workforce and fewer in so-called flyover states lead U.S. exports:
Republicans have begun to get a lot of grief from within conservative circles as the focus seems to be slipping, and everyone is not on the same page. These nudges come from not only concern about squandered opportunities in the past but also the embedded ineptness that is a Washington, D.C. hallmark.
The difference this time is Donald Trump; even he has a lot of different voices from his own team on the best way to fulfill promises. I am sure it will all get done; I am in the camp, it should be lower tax rates first, coupled with an immediate infrastructure plan, and then Obamacare while major tax reform should happen in 2018.
Looks like another tepid start to the session, but I like the pre-opening action in Cummins Engine (CMI) and Cliff Natural Resources (CLF).
I’m feeling very good about the market in general, and am willing to allow a few things to shakeout, but the building blocks of a strong economy keep getting firmer. That’s a million times more important than Twitter earnings.
Add a Comment!
Products & Services |
In The Media |
About Us |
All Rights Reserved.