We are in a bizarre world where I now actually fear a strong employment number -- not because of inflation, not because of fed tightening, but because I think the President will use the strength to tweet pot shots and make a lot of noise about our trading enemies and how eviscerating them seems like really good business. Don't you sense it yourself on days like today, when the futures are down only BECAUSE of fears of a step-up in hostilities?
These days, good news has become bad news, because when we have positive economic data we have begun to see a familiar pattern: The president tweets barbs that cause the 'Chinese' industrials, like Boeing (BA) , Caterpillar (CAT) , United Technologies (UTX) , Emerson (EMR) and 3M (MMM) , to get hammered because the tweets ratchet up the trade tension that already drips in the air. (MMM and EMR are Action Alerts Plus holdings.)
When the president was elected, he was known to be unpredictable on pretty much everything.
I think that's changed when it comes to the economy. We can now predict what he will do. You get a robust employment number, like I am expecting on Friday, and President Trump will tweet about how it is time to go after the Chinese and the Canadians and the Europeans -- and everyone else who has "taken us for a ride."
He uses the good news as an occasion to character assassinate our trading partners in a couple of mean-spirited words on twitter. And that sends stocks with international business into a tailspin and shifts capital toward domestic stocks that are almost always unscathed.
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As someone who genuinely believes in a tough trade agenda, I just wish the president would go about it differently, because the end game is to get lower tariffs on our goods worldwide -- and when it comes to China, no more stealing of intellectual property and no more bogus joint ventures that allow the Chinese to loot our best companies of their ideas.
The end game is not to humiliate and talk trash, which I think has had very limited success, as far as I can tell. If you see some success, please let me know. I haven't spotted it other than some possibility of some sort of agreement with Mexico.
Normally, when we get really strong growth in employment it is a terrific time to buy global cyclicals.
That can still be the case. But not on the day of the report, because we have seen angry tweets about our trading "partners" all day right after announcements of excellent news about the economy.
I am actually wondering at this moment if this Friday number won't be so good that it will cause a multi-tweet presidential fusillade that will bring DOWN the industrial stocks at the opening of trading. The selloffs overseas about trade worries, of course, informs my thinking all too well. And I get that the president knows if you can't attack now, with things booming, when are you going to be able to do so?
It's the way he attacks that has me disgruntled.
Look, you can't hide from your past.
I am no first-time rodeo guy on the trade question. I have been outspoken about the need for tariffs to stop our country from being ripped off unfairly in so many industries by so many countries. We have lost so many manufacturing jobs to nations that subsidize the cost of capital for business all over the globe. There is no level playing field.
I have repeatedly had a harder line than the president on many trade issues -- dating back to when I debated Larry Kudlow nightly on Kudlow & Cramer. I can't pretend I didn't argue for a stance similar to the president.
But when I put my stock hat on -- the one I wear now -- all I can say is, the tweets are too much, the vitriol too vivid, the anger too palpable to accomplish the objective.
Which means, be ready for a twitter-related selloff after a fabulous employment number -- because of harsh words on twitter about how "they" can't stop our country's economy: They being everyone we trade with, fairly or not. In keeping with the start of the NFL season, I call this trash talk, and I question whether it accomplishes anything at all.
Ah, the Friday employment number. The source of pain for so many years. Wasn't it easier when you just had to worry about the Fed and what it would do after the number? Who would have ever thought that good news would be bad news, not because of a practical Fed, but because of a president who just can't restrain himself from tweeting stuff -- stuff you may agree with, but doesn't need to be said in such an unmodulated form.