We can look for the Trump-related correction. We can wait for the tweet too far. We can try to ready ourselves for a break in the GOP coalition needed to get things done. But every day we meander, every day we just kind of bob and wave is a day where the risk grows less because in the end this is a business about earnings, not politics, and the earnings are pretty darned good.
There is no doubt that the rancor engendered by President Trump's executive orders will slow the agenda of corporate tax reform and perhaps repatriation.
There's just too much on the plate of Congress to move as quickly as Trump wants to. Plus, there are so many "this much be done firsts" out there your head's spinning. The repeal of Obamacare is first. No, barring the terrorists is first. No, corporate tax reform is first. No, infrastructure is first. No, tariffs are first.
Too much is first!
Plus, the president does seem to be racking up enemies at a pretty fast-track clip. Nearly 100 tech execs sign a document against the immigration ban. International leaders who are used to cordial relations have started fighting back. The retailers do not want this border tax that's needed in order not to cut the budget.
There. That's the litany you keep hearing about why this rally could fizzle.
I beg to disagree, and let me give you some reasons why I don't fear the big correction as much as others do.
First, Trump's compelling. He's compelling as a news story. He's compelling as a business story. He's always meeting with business leaders, captains of industry. This week he is meeting with the CEOs of the airlines. What is that about? We don't know. But I am sure it will trump anything else that's watched or talked about that day.
You know what, though? I question the focus at least when it comes to stock prices. It's terrific to have a Democrat and a Republican go at it as if they are equals. But they aren't. There are more Republicans than Democrats and until or unless a bunch of Republicans break ranks, then the equivalence is fantasy.
More important, just like the media obsessed on Fed policy, we don't want to obsess on Trump if we are trying to make money.
Yes, it is absolutely true that if the big parts of the agenda -- corporate tax reform and repatriation -- are delayed, that's a setback to higher stock prices.
But there are two other things that the bulls have going for them that must be factored in with a key caveat before I mention them -- they are more boring than covering Trump's every move, but they present far more lucrative opportunities to make money.
First positive? Deregulation. I know there is this fixation that everything's got to go through Congress. You want to remove the handcuffs of Dodd-Frank from the banks? Don't you need Congress? Won't that take forever?
I think that's the conventional wisdom and I think that wisdom is wrong. Trump's signaling to the whole regulation apparatus that he doesn't want a heavy hand enforcing these laws. The regulators used Dodd-Frank to come down hard on the banks. I am telling you right now that the days of coming down hard are gone. You can enforce regulations with a lighter touch. You can tell the compliance people that they don't have to be so heavy-handed. And if the regulatory authorities let the banks return more capital in the form of buybacks and dividends, then who the heck cares how much of Dodd-Frank is repealed? It won't even matter. That's why the banks are moving. And if we get faster growth, they will move more because the Fed will have to tighten and that's nirvana for the group.
Same thing with the oil and gas industry. In just a couple of weeks' time, the federal government in one form or another had greenlighted the Dakota Access and the Atlantic Sunrise pipelines. These were going to be dead on arrival under Hillary Clinton. Think about it. The Army Corps of Engineers was used to block the Dakota pipe. Now they are being used to approve it! The Atlantic Sunrise pipe proposal seemed to be lost in the bowels of Washington. Suddenly, both are game on, which his fantastic news for Energy Transfer Partners (ETP) and Cabot Oil & Gas (COG) and a host of others who need approvals to make more money than they currently do.
Can you imagine once the National Labor Relations Board is stocked with Trump people? How about the EPA? How about the FDA? The FTC? These will all be estimate-raising events for so many companies.
The second positive that blunts the chaos and rancor in Washington that might slow the agenda?
Think about what's been happening in the last few weeks. What would have happened if you had sold your stocks in some of the largest companies because you feared all that is happening? If you wanted to get ahead of a logical selloff as things got so heated?
You no doubt would have your shares in Apple (AAPL) , the biggest company on Earth, right? One of the main reasons people were sticking with Apple is that the company has more than $40 a share in cash overseas that could be repatriated. So you figure, hmm, repatriation isn't going to happen any time soon. Next thing you know, the stock is screaming toward all-time highs.
How about if you thought it would be worth bailing on Alphabet (GOOGL) or Facebook (FB) ? Wouldn't you have tremendous seller's remorse? After those monster quarters, you sure should. (Apple, Alphabet and Facebook are part of TheStreet's Action Alerts PLUS portfolio.)
There have been so many good quarters, and so many quarters that at first glance looked weak and were sold, like with McDonald's (MCD) or IBM (IBM) , but upon further review were buying opportunities.
These earnings are so important because while you may hate the way things look in Washington -- no matter what your affiliation -- the companies themselves have been the stars of this earnings season, not the president.
Look, I totally get how you might want to freak out. Things are happening at an unprecedented pace. I check my @realDonaldTrump Twitter file the moment I rise and the moment before I go to sleep. You have to. But you can't let Washington paralyze you when companies are doing so well. You can't just dump stocks because you are angry at Trump or frustrated that he may not succeed. That presumes stocks are a referendum on Washington instead of pieces of paper that give you an ownership stake in companies.
So, before you say, "I can't take it anymore, this correction has to happen," let me say you should indeed sell what you don't like. But only so you can buy what you do like if we do get the panic political selloff that so many expect but maybe, just maybe, doesn't happen.