WASHINGTON. CNBC generally does a decent job when it focuses on financial reporting. But only when the financial news outlet is not forced to post endless anti-Trump headlines and attacks. That’s why one of this morning’s leading CNBC online headline stories is so refreshing. “Trian Partners’ Nelson Peltz,” notes the network, “praised President Donald Trump on Thursday for his tough stance on trade.”
Nelson Peltz: The pause that refreshes
One of Wall Street’s well-known rich guys, Nelson Peltz’ support for Trump’s trade policy is a welcome surprise. As often as possible, nearly any report by the NBC stable of channels avoids anything good to say about the current U.S. President. Even better, on Thursday morning, CNBC allowed Peltz to elaborate on his bold statement.
“‘The president is doing some really brave things,’ Peltz said at The Deal conference in New York City, run by CNBC’s ‘Mad Money’ host Jim Cramer….
“At the end of the day he’s a great negotiator,” the activist investor said. “I don’t think we will end up with a trade war.”
No one – including the President – really has any idea how all the ongoing international tariff fest is going to end up. But one this is clear: Trump is the first president in decades to decide it’s high time for the U.S. to quit being such a patsy when it comes to trade deals. Peltz clearly thinks that he’s doing the right thing, no matter how energetically the MSM indulges in its predictable pearl-clutching.
Trump’s much ballyhooed tariff impositions are, for the most part, merely a belated answer to the ongoing tariff protections that most other countries have levied against America for years. The cognoscenti routinely condemn the president’s bold moves in this area as just so much Trumpian grandstanding. For the most part, they’re actually right.
A trip down Memory Lane
Trump’s critics never take the next step. Since our trading partners – political allies and enemies alike – have rarely, if ever, taken America’s desire for a more uniformly fair international trade policy seriously, Trump needed to grandstand by imposing some damaging tariff regimes of his own in order to attract international attention and ultimately force international freeloaders to take American trade complaints seriously enough to act.
It’s good to see that Nelson Peltz, at least, recognizes this key fact.
As more traders and investors break through the negative media filter system and come to realize what’s really going on, pressures on the current market lessen and allow a new segment of the Trump Rally – halted decisively in February – to attempt a recovery.
Of course, any negative international business story will tank the averages again. But if the media, and at least a few more American business leaders would publicly align themselves with Trump’s attempt to get more of a “Square Deal” on the international trading front, the better it would be for all concerned.
Perhaps it the hint of this kind of motion that moved Wall Street strongly forward Wednesday. The momentum continues today, at least in the Dow Jones Industrial Average. Having gained some 300 points during much of Wednesday’s trading action, the Dow was taking on another 111+ points Thursday as of 1 p.m. ET.
The Dow Jones Industrials like benign news on trade
Since international trade news has been positive for the second day in a row, it’s not surprising that the Dow – comprised of large, U.S. industrial companies that do a vast amount of business abroad – is taking a superstar turn here.
The much broader-based S&P 500, however, is diverging a bit. It’s currently logging a miniscule -0.1 percent drop. Ditto the tech-heavy NASDAQ. Having rallied strongly Wednesday, the Nazz is off nearly one percent as we write this. Perhaps those busy but nervous traders are trying to scalp yesterday’s nice gains in tech. Hard to say.
Both averages contain a multitude of companies that, while often quite large, aren’t as “yuge” as the DJIA companies. Smaller companies do more domestic business and less international business as a general rule. That’s why, when “trade war” fears are in the air, it’s these stocks that get bought while the internationally exposed Dow stocks get hit.
When international trading partners appear to be playing nicely, however, it’s the big, Dow-sized companies that get bought, often with money that’s just been made from selling the smaller companies. It’s a never-ending game.
It would be nice to end both Thursday and Friday (tomorrow) on a positive note as well. Spring 2018 has been a weird and often unsettling trading environment during which the good business news has far outweighed the bad. Except that it’s the bad news – real or fake – that always dominates the lamestream media outlets, keeping nervous trades and investors alike with one finger constantly on the “Sell” button.
Note: Starting Friday, we’ll be on vacation for a week, hanging out with longtime friends. Expect some scarcity when it comes to our columns next week. We’ll jump back in if the news warrants. But otherwise, it will be nice to just take a break and forget about stuff at least for a while.
The stock market is the greatest game in the world as far as we’re concerned. But as with any contact sport, you sometimes need a week to recover before you start playing again.
—Cartoon by Branco. Reproduced with permission and by arrangement with Legal Insurrection.