March 7, 2018.
If you look at the tickers, all of the major indexes ended up. Yet, that masks all of the movement after hours. All hell broke loose after yet another curveball from the most volatile and seemingly impulsive White House in recent memory. Gary Cohn, National Economic Council Director, and a friend – if there ever was one – to Wall Street, announced that he was resigning in the coming weeks. If things weren’t looking pretty for the White House, they got even uglier. Trump, without inhibition, has boasted that the market’s gains in his tenure are invariably and exclusively attributable to his market-friendly policies. That thesis was called into question recently with the 10% price correction on all major markets, but more than anything, Cohn was seen as the architect behind the huge tax reforms which had fueled the market’s stunning growth. And now, Cohn is out – adding to an already impressive list of advisors and spokespeople and chiefs of staff who simply couldn’t pass muster under the Trump reign. This, though, could be the biggest hit. Cohn, a former Goldman Sachs executive, was symbolically seen as one of the calming forces in a temperamental and unpredictable Oval Office. When speculation fomented about a possible Cohn exit back in August ‘ 17, the market felt the backlash. Late Tuesday, futures on the Dow were off 1.2%, the S&P 500 off 1%. The narrative in the news media goes as follows: Cohn lost a bitter fight over steel and aluminum tariffs, fighting like many Republican congressmen against the move as hurting the economy.
The recent spate of protectionism on Trump’s part all the more rattles investors, who have seen the dollar shave off value, America backing off more and more from its place as the world superpower. As we noted in the past, when countries believe that an ally is less dependable, they’ll hold less of its currency in foreign reserves. The hope with Trump was that he’d make judicious moves – throwing a bone here and there to the segments of the electorate he needs to get re-elected – but like with North Korea, Trump has shown no fear of playing with fire, boasting that the U.S. could cut other countries down to size with trade wars, wars that are almost always reciprocal, or mutualistic, pitting one country against the next, undermining growth in an attempt to protect either dying industries or industries long dead.
In America – and especially on the markets – the tide seems to have turned against Trump. Members of his own party are trying to get him down from the tree. Carmaker stocks have suffered. The greatest fear, though, is “Who’s next?” Almost like in a Stalin-like KGB regime, where you fear for your life, never knowing who’s watching your every move, tariffs spook investors and traders alike. Who knows what Trump’s next tweet will be?! Who knows which companies foreign countries are going to pick on?! From everything from orange juice to motorcycles, the sky’s the limit – and nobody knows how each and every country, from Mexico to Canada, from China to the EU will react.
Chapdelaine Foreign Exchange managing director, Douglas Borthwick, noted, “Since the Trump administration came into being, Gary Cohn was seen as being supportive for the stock market, and the thought was that if Gary Cohn wasn’t in the White House, the stock market would collapse.” At the same time, Borthwick thinks the damage will be temporary.
Cresset Wealth Advisors Jack Ablin, CIO, Jack Ablin, weighed in, commenting that he sees buying opportunities ahead. “If the market gets scared, I would view it more as a near-term buying opportunity than a reason to sell. He’s the chief economic advisor. That’s significant. My guess is he was probably let go because of the rhetoric and [Trump] wants the rhetoric aligned.” Whereas Cohn took the contrarian stance, Mnuchin, noted Ablin, “is standing at attention. He says he’s not against tariffs. Gary Cohn is against tariffs and trade wars.” Given the importance Trump places on the market’s performance, Ablin gives Trump more credit than many. “I think he doesn’t want to start a trade war just like he doesn’t want to start a nuclear war … this to me is the nuclear option of trade. For a president who uses the stock market as a barometer for success, I don’t see it as a live threat,”
Daily Summary: The blue chip Dow barely moved, up 0.04% on the day, the S&P 500 recording gains of 0.26% and the NASDAQ beating out the bunch with gains of 0.56%.
Oil prices fell late yesterday on the API data, losses made worse by the Cohn news.
Today’s Economic Calendar: Today will be jam-packed on the Economic Calendar. MBA Mortgage Applications will be released at 7:00 AM, followed up by the speech of N.Y. Fed president, William Dudley at 7:30. The key ADP Employment report will be released at 8:15, International Trade numbers coming out at 8:30, along with Productivity and Costs figures. Then, at 10:30, the EIA Petroleum Status Report will be released, the Fed Beige Book coming out at 14:00.
Wednesday’s Hot Stocks: URBN, ADSK, HRB, ROST, AVAV, NULL, RUN, BOJA, EDIT, KFY, ABM
Have a great trading day!
|Wednesday||8:15||ADP Employment Report||203,000||Medium|
|Wednesday||8:30||International Trade||$-55.1 B||Medium|
|Wednesday||8:30||Productivity and Costs||-0.1 %||Medium|
|Wednesday||10:30||Oil Inventories||3.0 M barrels||Low|
|Thursday||8:30||Jobless Claims||220 K||Medium|
|Friday||8:30||Unemployment Rate – Level||4.0 %||High|
|Friday||8:30||Average Hourly Earnings||0.2 %||High|
|Friday||10:00||Wholesale Trade||0.7 %||Medium|
|ROST||Ross Stores, Inc.||PM||Tuesday|
|URBN||Urban Outfitters, Inc.||PM||Tuesday|
|DLTR||Dollar Tree, Inc.||AM||Wednesday|
|COST||Costco Wholesale Corporation||PM||Wednesday|
|CZR||Caesars Entertainment Corporation||PM||Wednesday|
|AEO||American Eagle Outfitters, Inc.||AM||Thursday|
|NAV||Navistar International Corporation||AM||Thursday|
|DVMT||Dell Technologies Inc.||AM||Thursday|
|KR||The Kroger Co.||AM||Thursday|
|MRVL||Marvell Technology Group Ltd.||PM||Thursday|
|UNFI||United Natural Foods, Inc.||PM||Thursday|
|BIG||Big Lots, Inc.||AM||Friday|
|XRAY||DENTSPLY SIRONA Inc.||AM||Friday|
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