Some wag on Twitter told us to watch Whirlpool (WHR) soar today as its CEO, Jeff Fettig, met with President Trump this morning.
I had to laugh at this one but I can understand the sentiment. The president seems to want to meet with big business and is focused on big business keeping jobs here.
Whirpool, as we pointed out last week, makes a lot of appliances here and is always in jeopardy of dumping. So if the Fettig got to speak with Trump -- we don't know -- then it is possible that he made his case and Trump will listen. That's the same thing you have to hope for if you own Arconic (ARNC) (my charitable trust, Action Alerts PLUS, does), as CEO Klaus Kleinfeld met with the president, too. His company owns almost 20% of Alcoa AA -- remember that's the spinoff of Kleinfeld's company and Alcoa has been a victim of dumping, too.
Nevertheless, let's be sure about something. So far it seems like many of these meetings are pretty much one way, the Trump way. That means that the CEOs aren't there so much to plead their case as they are to understand that he will help them lower corporate taxes, cut red tape and repatriate money if they buy and hire American.
One thing is certain, though. The president is determined to help businesses only if they help him. The idea that you would buy any stock off of a CEO meeting with Trump seems quite ill-advised.
Consider the companies that have been called on the carpet by the president. He has been hard on Boeing (BA) , General Motors (GM) , Ford (F) , United Technologies (UTX) and Lockheed Martin (LMT) . I think that when we examine how the stocks of these companies have done we can only conclude that they are simply whipping boys, companies that are being used to make a point, not to wreck their earnings.
We know, for example, that the CEO of United Technologies, Greg Hayes, has told us that the decision to keep some Carrier jobs in Indiana as opposed to sending them all to Mexico, did cost United Technologies money. A couple of pennies.
To me, though, that was all about one thing: don't be the next United Technologies. I think it's working.
Not only that, but if Foxconn, the giant Chinese company, really does put a factory in Pennsylvania, that, too, will be a sign that tougher talk on trade has brought some jobs here.
And tomorrow we will get earnings from Lockheed Martin, which has agreed to lower the cost of its most important defense contract, the F-35 joint strike fighter. Will this be the first company where numbers come down because of the president? So far analysts haven't reacted at all to any of this. Could tomorrow be different?
And let's touch on the big trade-off that no one seems to want to debate. The decision by many companies to move offshore had two parts to it:
- The companies would be able to make more money per item they built because it's cheaper to build, including often a debased currency; and
- The consumer in the U.S. would pay less.
This president has made a decision that it's better for one group of people to get jobs so they can afford to buy things vs. a much larger group that can save money by purchasing goods more cheaply than if they were made with our high cost of labor.
It's a trade-off that's been made by this president. There's no going back from it. That said, it's not something that has yet mattered to the market because the market is salivating for lower corporate taxes and repatriation and deregulation. For investors, the higher cost of some goods is a small price to pay for higher earnings per share going forward.