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More Damsels in Distress

The opinions expressed by columnists are their own and do not necessarily represent the views of

Donald Trump pulled off a masterful deal that saved more than half of the jobs at the Carrier plant that was supposed to be shipped out to Mexico. The deal involved a $7.0 million tax incentive from the state.  I assume there was some verbal jabbing with respect to the almost $7.0 billion a year the company’s aerospace and aircraft engines divisions does with the federal government.  


Now, there is the anticipation of more announcements as the list of companies moving to Mexico and other countries is relatively long.

Some conservative economic purists on the right like Jonah Goldberg and even Sarah Palin (see box) don’t like the idea of a President or President –elect cutting deals with companies; using taxpayer funds, suggesting its simply crony capitalism.

On the left, Bernie Sanders and Paul Krugman claim that the president bowed to extortion.

Politicians picking and choosing recipients of corporate welfare is railed against by fiscal conservatives, for it’s a hallmark of corruption. And socialism. The Obama Administration dealt in it in spades. Recall Solyndra, Stimulus boondoggles, and all their other taxpayer-subsidized anchors on our economy. A $20 trillion debt-ridden country can’t afford this sinfully stupid practice, so vigilantly guard against its continuance, or we’re doomed.

-Sarah Palin

The fact of the matter is that companies aren’t inherently anti- American but their bottom line comes from patriotism. On that score, these companies would love lower taxes, fewer regulations, and the ability to save money (being closer to the buyer of their products).  America also has an abundance of energy, including cheap natural gas and even cheaper coal.

Still, as recently as Friday, Ford reiterated its intentions of moving small car productions to Mexico. The CEO of the company, Mark Fields, said he was willing to work with the new administration if some things could be done on the Corporate Average Fuel Economy (CAFE) standards and other incentives.


Wink: Tax breaks?

It’s not scheduled to happen for a couple of years, so there’s time for the Trump administration to make America more attractive to manufacturers. However, there are some companies where employees need Trump to work his magic immediately.

The Eye of the Storm

Rexnord Corporation (RXN) is down the road from Carrier. The publicly traded company’s shares are changing hands at $20 from north of $30 back in Mach 2014.  The company was on the receiving end of a strongly-worded Donald Trump tweet this past weekend, and it will be under a tremendous spotlight.

Cardone Industries is the largest manufacturer in Philly, but it has been sending workers to Mexico for years despite the pledges not to go a long time ago.  Dematic Corporation made their layoff announcement earlier this year. It’s unclear if the workers can be saved, but the company still has 900 workers in America that would love a different fate.

Caterpillar (CAT) is altogether a different beast, which has grappled with this issue for years. As of now, 70% of its business comes from outside the United States. Be that as it may, the Trump win has sent the company’s shares soaring. It’s only a matter of time before the president - elect has the company in his sites.








Grand Rapids






I think there are economic principles that shouldn’t be ignored, although there are elements that will jumpstart this economy, including an inspiring flyover country.  The Carrier deal is not the same as Obama’s solar fiascos in a sense that it didn’t subsidize one industry while punishing another, but there is a danger of appeasing companies with federal favors. 

By the same token, the stock will only go so far. No one is going to stay in business to lose money or see profits capped - customers will pay the 35% tariff or go with products they don’t want.

Investors Know the Score

The market ended with a whimper on Friday, followed by the lead of the November employment report with a mixture of mostly disappointing data, underscoring how entrenched our jobs recession has become. Perhaps the biggest disappointment was that more than 200,000 people dropped out of the workforce, and wages slipped from October.  

The jobs report is really two surveys.  One is the so-called Establishment Survey of businesses, and there’s the Household Report.  According to the latter, November saw only 9,000 full-time jobs versus 118,000 part-time jobs, and that was an improvement from October, where 90,000 part-time jobs couldn’t offset the loss of 103,000 full-time gigs.

The news was disappointing, although it’s not shocking and not a deterrent to new enthusiasm. There is a general sense the market has come too far, too fast.  


Case in point: According to the American Association of Individual Investors, bullishness declined by six percentage points in the past week to 43.8%, after it surged by 109% from a per-election low of 23.6%.   While Wall Street likes to label an individual investor’s enthusiasm as a contrarian indicator, I’ve come to respect the intuition of Main Street.

(The main problem with Main Street investors is poor diversification and the unwillingness to take losses.)

Moreover, I like that investors have calmed down a little, but bullishness is still well above its historical average -that’s the bias that should mitigate the downside for Trump stocks. 


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