WASHINGTON. As widely expected, President Trump announced he pulled the trigger on his long-threatened national emergency declaration. Due to Democrat Congressional intransigence and Republican blundering, he will now fund the Wall in other ways that are legal under current law. Next stop: every left-wing court in the land.
What promised to be an anemic to negative Friday on Wall Street – prior to the President’s Day Federal holiday plus long weekend – promptly turned into an impressive stock market rally after the national emergency proclamation was reported.
Poison pill Wall and funding legislation = juvenile delinquents brawling in the schoolyard during recess
In reality, Trump learned he had once again been thwarted by a Democrat-influenced poison pill contained in the “bi-partisan” Congressional budget “compromise” that Congress sent to his desk for his signature. Par for the course, Trump’s own party wimped out on him again by concealing this fact until the last possible moment, rightly infuriating the President. Moving to the national emergency declaration was his next logical choice. A perfectly legal one, BTW. According to numerous reports, at least 30 such declarations by Barack Obama and George W. Bush still remain on the books.
What happened here? In a juvenile display of legal cleverness, the “bi-partisan” Congressional committee, including the usual spineless Republican milquetoasts, gave Trump only a tiny amount of his requested funding for the Wall in their “compromise” legislation. But the poison-pill language concealed in that legislation simultaneously forbade him to use even that money to build the Wall where it needs to be built.
Cute, Democrats. Stupid, GOP negotiators, for either ignoring this legislative slight-of-hand or for lacking the moral and political courage to get it out of the bill. We pay these people good money to take care of the nation. Instead, they enrich themselves and destroy what’s left of the country. This will not end well.
National Emergency time, those China Trade Talks. Retail sales miss: down the memory hole
As we noted in yesterday’s column, three major influences continued to influence US stock market averages this week. They are, in no particular order, the China trade talks, the Trump Wall as connected to the Federal budget mess and the recently reported poor December consumer retail sales figures. Yet job growth remains strong.
Of the three, the poor retail sales numbers are quickly slipping out of the headlines today. Some analysts think that poor number might be an anomaly.
The latest President vs Congress brouhaha is so same old, same old that it likely hasn’t pushed the stock market ahead all by itself, even though we’d like to think so.
What may be moving markets today is that yesterday’s negative news on China trade talks seems to have flipped to relatively positive again Friday.
Friday’s surprise Wall Street rally
As of 12:30 p.m. ET or thereabouts, the Dow is up 350 points on the day thus far. That’s a gain of nearly 1.4 percent. If it holds. The NASDAQ is up about half a percent, and the S&P 500 – the average the pros usually follow – is currently ahead 0.85 percent. Pretty nice moves for a Friday before the long weekend occasioned by Monday’s President’s Day holiday.
It could just be that, between smelling the possibility of another eventual Trump victory (the national emergency order) and the possibility that something besides more tariffs could arise from the current China trade talks, might have encouraged previously sidelined bulls to get back into the action. That’s because any kind of breakthrough in the US-China trade negotiations will likely kick off a colossal Mother of All Rallies. Bulls would like to be queued up at the starting gate when that happens.
IF it happens.
For if not, the advantage will instantly revert to the bears and their best friends, those eager short-sellers.
Energy and bank stocks coming back into favor?
On other fronts, energy stocks, which have seemed a bit wobbly lately, got a boost again Friday due to higher oil prices in the commodities markets. West Texas Intermediate futures, the US benchmark, jumped close to 2 percent, currently hanging around $55.42 bbl.
Bank stocks and assorted fellow financial stocks also got a kick today after seriously languishing throughout Q4 2018. On one hand, with Federal Reserve interest rate hikes allegedly on hold for now, banks likely won’t be able to make more money lending at higher interest rates any time soon.
On the other hand, the cost of real estate loans are headed down again. And just in time for the advent of the spring home buying season. So bank lending operations may end up making decent returns anyway, replacing higher interest rates with a lot more mortgage financing anyway.
Trump Rally resumption, or rebound from an oversold Q4 2018?
One money manager interviewed on CNBC matter-of-factly views 2019’s positive market start as an almost inevitable reaction to last fall’s way-overdone market cliff dive.
“‘The market is just getting rational again and simply rebounding from an irrational sell-off last fall,’ said Craig Callahan, president at Icon Funds. He said the market was brought down late last year by fears of a Chinese economic hard landing, worries that a slowdown in China could spread around the world and concern over tighter Federal Reserve monetary policy.
“‘We think this is just those fears subsiding and the market being rational again,’ said Callahan. ‘The China trade talks are helping with the first one.’”
Our current China Syndrome
More from another CNBC interviewee, this time on China.
‘If there is a resolution, you’ve got a lot of market participants who are anticipating a big pop-up. That’s why we continue to see money into the equity market as well,’ said Daniel Deming, managing director at KKM Financial.”
Taxpayers fleeing Big Blue States in record numbers
In other financially related news, we have another national emergency. Of the virtual kind.
The mass out-migration from high-tax blue states to low or no-income-tax red states continues unabated. The out-migration from New York, Illinois and the Sanctuary State of California continues unabated. That’s good news, generally, since the Red States these reasonably well off internal migrants are heading for may very well gain electoral votes at the expense of those three aforementioned Deep Blue states.
According to a piece in The Hill by Jonathan Williams, the numbers involved in this phenomenon are quite impressive.
“Big winners in net domestic migration in the past year include: Florida (+132,602), Arizona (+83,240) and Texas (+82,569). On the losing end we find: New York (-180,306), California (-156,068) and Illinois (-114,154)…
“By contrast, each of the high out-migration states have an economic outlook ranking of 50th, 47th and 48th, respectively.”
America’s REAL immigration problem: Blue Staters migrate to Red States, still vote Democrat.
On the other hand, this constitutes America’s “other immigration problem,” our real national emergency in many ways. That’s because those overtaxed Blue Staters fleeing to Red State tax havens seem unable to turn off their apparently hard-wired “Vote Democrat” switches, even after they move. Their chic, phony socialism moves right along with them.
It should be intuitively obvious to them who was responsible for motivating them to leave their long-time homes. But instead, as they begin to swamp the Red States, they’ll likely start voting in the same kind of Democrat Socialist clowns that screwed them in their home states to begin with.
This kind of invincible ignorance is hard to fathom. But that’s why at least 3 formerly rock-solid Conservative strongholds – Nevada, Colorado and New Hampshire – have gone socialist in recent years. The next targets on the ignorance hit list – North Carolina, Arizona, Florida and Texas – are even more alarming. That’s a voyage with no return.
It’s something to ponder. And to worry about.
In the meantime, we have a long President’s Day weekend to enjoy, so let’s get to it. We’ll be back with our regular column next Tuesday. But we might jump in over the weekend if any significant market-moving news happens to break.
— Headline image: President Donald J. Trump at his desk Friday evening, December 21, 2018, in the Oval Office
with a stack of documents awaiting his signature. (Official White House Photo by Shealah Craighead, in the public domain.)