I don't know Steve Bannon from Adam. Have never met the man. He has been a faithful representative of the hard far-alt-right, or whatever they are called these days, that got Trump elected.
But I do know this. The market seems to like his departure as Trump's chief strategist because he is viewed as someone who likes what I would call creative destruction, which can be good in business but not so hot when the president needs creative construction.
But if I were to suddenly pop into the White House, which I can tell doesn't seem all that likely, I would place two books on the night table of the president: Fear and Loathing on the Campaign Trail by Hunter S. Thompson, and Nixon Agonistes by Gary Wills.
First, these are amazing books because they are all about the triumphant Nixon election over George McGovern, where McGovern only won one state: Massachusetts.
Second, they both accept the brilliance of Nixon and how he knew so much about politics. One of the key tenets? You own your base. It's yours to do what you want with, which is basically turn against it because they aren't going anywhere. You are in. They elected you. They will elect you again.
Nixon was then able to accomplish much more than anyone remembers. I say that because most of what people remember about Nixon is Watergate. Before that, he was someone who had great ease and success with a domestic agenda because, as Thompson described so well, Nixon found it so easy to make deals. He wanted a legacy that was actually fairly liberal, set largely by Daniel Patrick Moynihan.
Nixon never worried about losing his base because he recognized that his base had nowhere to go.
Trump's base has nowhere to go. So you don't need to stoke them or cheer them. You can throw them a bone but you have the luxury of trashing neo-Nazis and the KKK and any extremist, and whatever candidate the Democrats elect, they would rather die than vote for them.
Bannon seems like a guy who doesn't get this. My only interchange with him is that he wrote that I got his father out of AT&T (T) in the Great Recession. He clearly hasn't read Get Rich Carefully, which has a whole chapter devoted to technicians and finding bottoms, which led to my big push to buy AT&T, not sell it. All pretty well documented.
That's all water under the Love Canal.
But here's what matters. The market viewed Bannon as the enemy of Gary Cohn, particularly when it comes to trade, because Cohn is virulently anti-tariff and Bannon is the opposite, especially when it comes to China, where he was pretty strong about the need to respond to the endless dumping the Chinese do here. They are the worst. I am actually with Bannon on this, not that he would care. I am actually a little tougher than him because I think we have the worst trade deals with every partner and no matter what exigencies caused them, they need to be reviewed.
So to put this all in perspective, if we were worried about Cohn leaving, we just got a big break. I think a purge of Bannon means Cohn stays.
Remember, Cohn is a practical man. He wants to get something done. Bannon? Nixon Agonistes and Fear and Loathing would say he's great for the election but needs to go spend some time at a think tank.
We should have been down this morning, at least from the follow-through from yesterday. But Applied Materials' (AMAT) quarter was fabulous and the company made it clear there's no boom/bust in their markets, just secular growth in the Internet of Things. Bingo.
The day is long. But with Cohn theoretically in and Bannon out, the bulls get a reprieve.