It's different. The market's gotten very different and that's part of the unease we sense every day now that the market's gotten so much rougher since the January peak.
We know it's gotten different when it comes to the White House. We've got a commander in chief who no longer seems to have command of the stock market in part because he's making changes that send more stocks lower than higher.
When you put tariffs on to protect our steel and aluminum industries you risk the ire of those who consume those products and those who fear that China will do something, anything, to fight back at duties that are clearly meant to keep China from targeting our industries to create jobs there and take them away here.
But just when you think President Trump is all in when it comes to tariffs he appoints uber-free trader and former CNBC senior contributor Larry Kudlow as his chief economic advisor.
Before the appointment many tech stocks were getting hit out of fear that China will retaliate. After the appointment the same stocks are rallying as even the change of address to the west wing for my old partner Larry sends the signal to the Chinese that positives of free trade will at least be presented to the president.
Same thing goes for the big multinationals that do business all over the world. Larry may be speaking a tougher line on China but there seems to be no new tone for the rest of the world. That's brought new life to the big international industrials like 3M (MMM) and Honeywell (HON) .
I don't want to get too cozy though. Larry Kudlow know that he serves at the behest of the president and if the president says something nasty about Chinese tariffs don't expect Larry to contradict the president in public or in private as his predecessor Gary Cohn certainly did.
You want more good news about Larry? He's always been a leader for lower taxes for individuals, but just as important he believes that drastically reduced taxes on capital gains produce drastically increasing economic activity. So if the president says something that sends the market lower trust me when I say that Larry will be on air telling people that the president favors growth and lower taxes.
That's soothing but understand that we are not in the old market where all you got from the White House were pronouncements that would send stocks higher. You might get a delay between a presidential tweet and Larry's pronouncements about growth and lower taxes, but you might want to think twice before you sell stocks because of presidential pique.
But it's not just the White Hose that's sending mixed messages It's all wings of the government. Republicans led an actual bipartisan rollback of some of the provisions of Dodd Frank that bankers thought most onerous. That's a big win for the financials and the stocks got a little lift.
I contend that what matters far more for the banks is the way the regulators treat them and let's just say, they treat 'em real well.
There have been so few cases brought by any agency against any bank that I keep expecting to hear about big layoffs in the compliance and general counsel offices of these institutions. No new agency regulations or prosecutions gives the banks a lot more latitude to lend. It's the government doing right by the private sector. And the private sector is responding by loosening its purse strings. Or to put it in laymans terms, it's a heck of a lot easier to get a loan than it was under the previous administration.
To me the bank stocks remain among the cheapest in the market and every time they come down you have to tell yourself that the light touch of these new regulators will mean higher earnings down the road for certain.
But then consider the blasting that the oil and gas master limited partnerships got today when the Federal Energy Regulatory Commission disallowed a favorable tax allowance that had been a gift to the group.
When I saw the ruling I said "What the heck? FERC was supposed to be pro pipeline." This decision set the pipeline business back far more than any of the environmental rules that President Obama championed. It was a total shocker. Who would have thought that this administration's FERC would do more to starve pipeline growth than the Democrats could with all of their rhetoric and lawsuits blocking more pipes from being built all over this country.
What can I say, though? The fickle nature of the government is a wild card that we will just have to get used to.
Oh and let's throw in the big daddy of fickle, takeovers. In 2017 they were a given and they always worked. You had them all over the place.
In 2018? Next week should be the beginning of the government's case against the ATT (T) -Time Warner (TWX) deal, a case that I may add that I believe would never have been brought by the previous administration.
Then there's the unbelievably heavy-handed way that the government stopped Broadcom's (AVGO) attempt to buy Qualcomm (QCOM) . I am reeling from what happened there where both CFIUS and the president himself weighed in making Broadcom seem like some sort of Chinese Fifth Column giving away the trade secrets for 5G that Qualcomm has. It was extraordinary and, again, a deal that I do not think would have received the same scrutiny under the previous administration. It is impossible to believe that President Obama would have ever gone to the lengths of issuing an executive order to stop a deal.
Now, let's say you step back and look at the landscape, what do you see? I think you see something we'd all better get used to seeing: radical inconsistencies that simply didn't exist in the halcyon days of 2017 where there were free passes all over the place.
Think about those wonderful days. You would get a presidential tweet that criticized a business for doing the wrong thing and a few days later there would be be a capitulation of some sorts and then things would be off to the races with the leaders being the stocks that were most bashed.
I used to joke that the president was raising numbers and slapping on strong buys something that culminated with the biggest estimate raiser perhaps of all time, the gigantic tax cuts for corporations coupled with the repatriation of assets that could be used to boost growth or boost dividends or boost earnings. Raising numbers all around.
Now though we could be cutting numbers for industrials off of raised prices for aluminum and steel. We could be slashing estimates across the board for companies that do business with China. We may even be cutting numbers for companies with overseas earnings because one thing we've left out of the dialogue about Larry Kudlow's appointment is that he favors a strong dollar, a real estimate cutter.
At the same time, anyone in the pipeline business got numbers slashed galore.
And takeovers? I think the landscape has been changed dramatically.
Now don't get down on the market. There are, after all, the fundamentals and business is real good.
I just think that looking to Washington for help? -- That's 2017's story.
Twenty-eighteen? It's a whole different narrative and not a good one for the prospect of smooth sailing and higher stock prices.