Are the markets even watching the news?
President Trump fired Secretary of State Rex Tillerson today, or maybe a couple of days ago, it's not entirely clear. The move makes Tillerson the second Cabinet member to exit the Trump administration -- Health Secretary Tom Price was the first -- and the latest departure from a White House that's had more turnover than any other in the modern era.
On a day when the President also blocked Action Alerts Plus holding Broadcom's (AVGO) bid for Qualcomm (QCOM) on national security grounds and the government reported that the consumer price index rose 0.2% in February, matching estimates, the news of the defenestration of the nation's top diplomat had little effect on U.S. equity markets. Stocks have stayed positive for much of Tuesday's session.
The three events just added to the general cacophony that's been typical of Trump's presidency so far: so many things happen that would dominate news coverage for most other presidents, and yet seem to slide right off Trump.
To a degree, it works both ways. For example, another news story from last night that would seem significant -- the House Intelligence Committee, which was investigating Russian meddling in the election and Trump's potential ties to it -- is closing down and determined there was no collusion. Big story? No, it's so last evening.
That's the way it's been going. Remember last week, when it looked like Trump was going to start a trade war over steel and aluminum tariffs? How ancient history is that right now. In the meantime, Trump has indicated that both Mexico and Canada will be exempt from the new levies, and members of the European Union may also get a similar deal. So, not so much to worry about on that score after all.
Last week we also heard about the possibility of a meeting between the U.S. President and the leader of North Korea, an invitation that evidently hasn't actually been delivered by the North Koreans yet. Ratcheting back the rhetoric and getting to negotiations is an excellent idea, as long as it lasts. Especially older readers may remember last year when Trump told Tillerson there was no point in even talking with Kim Jong-Un.
Words, words, words, as Hamlet said.
Anyway, the Trump trade seems poised to roar away, undeterred by -- or indifferent to -- or even aided by the erratic and unpredictable president. Equity investors have their sights set clearly on prospects for record corporate earnings fueled by massive tax cuts this year, and that is going boost stocks. Add to that a regulatory environment that's actively seeking to bolster industry and a U.S. president who's giving corporate CEOs a lesson in deportment and character, and the outlook for stocks looks even better.
It's not particularly great for his reputation that President Trump faces lawsuits by a porn star, as well as inquiries into campaign finance violations, attempts to obstruct justice, and even suspicions that he may be something ranging from the dupe to the stooge to the witting agent of the Russian espionage services. But, Trump doesn't have a great reputation to lose on those matters. For Trump's supporters, those things can be regarded as features of his presidency, not bugs.
For investors, what matters is tax cuts, loosened regulations and a hands-off attitude as regards to big business. For the 10% of Americans who hold about 80% of stock market wealth, it's a great time to be an equity investor.