You know what's amazing about this market? That it isn't down huge. Because right now there's a war on business from U.S. politicians and it's gotten out of control. If it keeps up, you have to believe this bull phase will stall or flame out.
First, let me tell you where I am coming from. I think the war's insane. Business, the creation of capital through hiring and building something, is to me worth celebrating. I look at business as a way to put food on the table. I look at it as a way to give people health care. I look it at as a way to invest and for our nation to remain the most powerful on Earth. I celebrate it, and when I see fabulous business people doing wonderful things, I salute them. Why not? We lavish praise on sports figures, but what jobs do they create? Who do they really help?
However, good business people? They are heroes to me.
But that's not how politicians look at business right now. Think about this war because it is front and center in the investing firmament and the rhetoric is so damaging, the actions so threatening, that we might as well be at a bullfight, and we all know how those end.
First, there's the astonishing actions by the U.S. Treasury Department in blocking the Pfizer (PFE)-Allergan (AGN) deal. Here's an agency that two years ago said only legislation can block inversion deals, where companies lower their tax rate by merging with foreign-domiciled entities. But since then it's promulgated three rules to stop just what it said it couldn't stop. The last rule, put in at the 11th hour, specifically blocked the Pfizer-Allergan deal even as both companies were in total compliance with the previous two rules. The nonchalant moving of the goalposts to get this one crushed was, as Allergan CEO Brent Saunders said, just plain un-American. I agree. I think Treasury Secretary Jack Lew was ordered to find a way to block this deal and invented a way to do it out of whole cloth. How is it possible that Lew said legislation, not IRS rule-making, was needed to block these kinds of deals, and then he just blocks them anyway with the rules that Treasury itself decried when pressed just two years ago? That's government by fiat.
Second, there's the Justice Department's move to block the Baker Hughes (BHI)-Halliburton (HAL) deal. Now, I was never a fan of this deal, given that these are two of the largest oil service companies and it could lead to uncompetitive pricing. But both companies were willing to divest whatever was necessary to please the government. Again, though, I think the Justice Department was arbitrary, capricious and cavalier in not articulating what these two companies needed to do to satisfy antitrust laws. Instead, the antitrust division's chief, Bill Baer, in what the USA Today called "a blistering rebuke," simply called the deal "unfixable." The two companies intend to contest the government's action but all I can say there is good luck.
Third, there's the unprecedented attack on business that Bernie Sanders has launched, one that has my head spinning. Consider that he tells the New York Daily News that if he is elected president he will have the Treasury Department break up the big banks. Whoa. Does anyone remember when the government begged JPMorgan (JPM) to buy Bear Stearns and then fined the company billions of dollars for Bear Stearns' actions? The government not only allowed Bank of America (BAC), Wells Fargo (WFC) and JPMorgan to buy failing banks during the Great Recession, it pleaded with them to do so. Now Sanders demands that they break up?
This morning, we got the annual letter from JPMorgan CEO Jamie Dimon, and say what you want about the banks, the company has done everything it can to comply with the ever-changing rules that the Treasury, the Fed and Justice have demanded. It's spending $9 billion and has 43,000 people who just do controls for the bank, up from 24,000 and $6 billion since 2011.
Dimon professed that he wasn't happy with the bank stock's performance during his tenure, even with the S&P. But the stock has outperformed its cohort, which is saying something given how heavy-handed and relentless the government is against the banks -- and that's me talking, not Dimon, who doesn't blame the government for not beating the S&P.
Fourth, there's the totally head-scratching attack on GE (GE) from Sanders, saying the company is "destroying the moral fabric" of America. Now, no company is perfect and GE's had its share of faux pas, but saying GE is an example of corporate greed at its worst seems harsh. As CEO Jeff Immelt said in an opinion piece in the Washington Post, "GE has been in business for 124 years and we've never been a big hit with socialists." But he goes on and says, "We create wealth and jobs instead of just calling for them in speeches." He goes on to say, "We take risks, invest, innovate and produce in ways that today sustain 125,000 U.S. jobs," including, he points out, jobs in Vermont, where Sanders is from, that employ 1,000 people making jet engine components. Oh, added bonus, he writes that "Vermont's junior senator is always welcome to come by for a tour."
I am not against all government actions against business. I like that the Commerce Department, for example, imposed a 266% duty on some Chinese steel imports, so that the vital American steel industry isn't wiped out by Communists dumping the stuff here. It's pretty terrific that U.S. Steel's (X) stock has doubled since March 1 when these were put into effect, thereby assuring that it can raise some money if it needs to. I like the fact that the International Trade Commission is looking into Chinese dumping of aluminum. The Chinese have been flooding the world, including the U.S., with subsidized steel for years. If the Commerce Department does what it did to steel to aluminum, who knows how high Alcoa (AA) can go? Be careful, it reports Monday and it may not be a good quarter, but you get my drift.
I also like when the Labor Department issues rules that financial advisors have to put clients first, something the agency says will save investors $40 billion over 10 years. Can I ask who they were putting first before this? Hmmm.
But the war on business itself to me is a war against you. Ninety million households own stocks in this country. Ninety million households depend on stocks for their retirement, for wealth creation for their kids' schools. Companies have to make decisions and can't have the rules changed on them and repeal what they did when they were playing by those rules. Will the government decide now that DuPont (DD) and Dow (DOW) can't merge because they are both big guns in the worldwide chemical industry? Will Treasury issue rules that change the tax code so that you can't borrow money to buy back stock anymore? Who knows where this can go? (Allergan, Bank of America, Wells Fargo, GE and Dow are part of TheStreet's Action Alerts PLUS portfolio. GE is part of the Dividend Stock Advisor portfolio.)
It's time for the government to pull back and wait until a business does something wrong to attack. Otherwise, if this keeps up, owning stocks will become a reckless thing to do with your money. There are rapacious capitalists, but not all capitalists are rapacious. Stop the war, have elected people pass laws that give agencies the power to do the things they don't have the right to do now and declare a truce so companies can do what they do best: hire, create, serve customers and generate wealth for shareholders of all shapes, sizes, colors and creeds.