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OPINION

Trump 2.0 AKA Campaign Trump Roils Elites

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
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On January 26th of this year, President Trump took his show on the road to the mecca of globalism and the annual confab of elitists in Davos, Switzerland. Ironically, President Trump was treated like a rock star at the gathering, where the general conclusion was that he was a pragmatist.

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Perhaps it’s not so ironic that January 26th was the day the stock market reached its last all-time high. The Dow Jones Industrial Average peaked at 26,616. Many folks on Wall Street finally noticed he was going to shake up business as usual. 

Of course, President Trump put the world on notice at every campaign stop for two years. I guess everyone is taking him seriously now.

I think the selling today was more about Wall Street trying to intimidate President Trump, knowing his affinity for stock market wealth he’s generated since he won the election. However, his recent moves prove while he wants the market to do well, he isn’t taking his cues from the canyons of lower Manhattan.

Click here to view the chart.

Our good trade deficit with China is unsustainable, and the notion the World Trade Organization (WTO) can reel them in is farfetched.  It was supposed to be the WTO that would get them to be good actors in the first place.  China joined the WTO in December 2011, and the complaints have only piled up along with our trade deficit.

I get where some folks think it’s no big deal if China wants to subsidize industrial metals or any other product because American consumers get the finished goods cheaper, but industries have vanished and that’s problematic. There is one area, however, the globalist and economic nationalist should agree that it’s the bold-faced theft of our intellectual property.

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Three Areas of China’s IT & Counterfeiting Theft:

• The high-end estimate for counterfeit and pirated tangible goods is $41 billion

• The high-end estimated value of pirated U.S. software is $18 billion

• The high-end cost of the trade secret theft to U.S. firms’ estimate is $540 billion or 3% of the U.S. Gross Domestic Product (GDP)

Corporate Earnings

Nike (NKE) posted its earnings results and beat the Street on revenue and earnings, driven by growth around the world and paced by Greater China.  North America remains the largest market but says there is a year-to-year decline in revenue, although it’s less than anticipated.

  • North America: $3.57 billion -6%
  • EMEA (Europe, Middle East & Africa): $2.30 billion +18%
  • Greater China: $1.34 billion +24%
  • Asia-Pacific: $1.27 billion +13%

Micron Technology (MU) also posted strong financial results as both SSD and graphic chips achieved record prices, driven by demand from the cloud, mobile, and automotive clients. 

Operating margins surged to 49.4% from 25.3% in the prior year period.  The stakes were high as several firms recently lifted their targets to $100 for the stock, which is actually slightly lower at the moment.

KBH Home (KBH) posted earnings and a slightly lower revenue guidance; management raised its outlook for an operating margin of 8.0% from 7.7% and an average Selling Price ($410,000 from $405,000).

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Other great initial reactions to news after the bell on Thursday:

  • Smart Global Holdings (SGH)
  • At Home Group, Inc (HOME)
  • Cintas Corp (CTAS)

Key Support & Leadership Question

Tomorrow will be the first moment of truth for the market; keep these key support points in mind:

  • Dow 23,860
  • S&P 2,580
  • NASDAQ 6,777

Where’s Leadership?

Financials was the worst performing sector when they should have been the safe haven, but the Street is apparently worried about the tightening yield curve.  It’s so confusing that the Street could be worried about the Fed cooling a too-hot economy, and think a possible recession is around the corner.

Click here to view the chart.

Today's Session

The futures are well off the lows and the market looks to open in the green.  President Trump has tweeted that he may veto the $1.3 trillon spending page to fund the government.  And China is threatening to retaliate on US tariffs with $3 billion in tariffs on US pork, wine, fresh fruit, ethanol. and steel. 

There is economic data out that we will discuss in the afternoon note.

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