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Friday, December 15, 2017

Bartiromo explains the Trump Rally

You and I knew the stock market would soar when we elected Donald John Trump president, but we did not fully understand how that worked.

Maria Bartiromo just explained how electing Trump improved the economy.



Writing in the Wall Street Journal, she observed:
As [election] night wore on and equity traders began to grasp that Donald Trump would become president, stock markets around the world started selling off. In the U.S., trading in S&P 500 futures would eventually be halted after a 5% decline. After midnight, Paul Krugman of the New York Times opined: “If the question is when markets will recover, a first-pass answer is never.”
I didn’t see it that way. For years I’d been hearing anguished people at companies large and small bemoan the growing federal burden of taxes and regulations. Now the U.S. would have a president who intended to reduce this hardship and prioritize economic growth.
And there's the key.

There is the difference between an economics professor and a business reporter. The professor studies books and charts, and dismisses the complaints of businessmen as lies from greedy little bastards.

Bartiromo interacts with businessmen daily. She talks to them. She asks provocative questions. She studies them. She treats them as human beings, and not greedy little bastards.

Conservatives get hung up on taxes, but regulations are the real problem. Cigarette companies pay taxes that are (on average) eight times their profits. Gladly. That's how they stay in business.

Casinos in West Virginia gave the state nearly half their revenues just to get a chance to do business here. Then they used West Virginia to coerce legalization of casinos in neighboring states.

The profit margins for vice are that large.

More from Bartiromo:
The election night selloff turned out to be a huge buying opportunity. Companies had been sitting on cash — not investing or hiring. ObamaCare compliance was a nightmare for many business owners. It made them wonder what other big idea from Washington would haunt them in the future. Mrs. Clinton was likely to increase business costs further, while Mr. Trump had vowed to reduce them. Even in the middle of the election-night market panic, the implications for corporate revenue and earnings growth seemed obvious.
The next morning, with the Trump victory confirmed, I told my colleague Martha MacCallum that I would be “buying the stock market with both hands.” Investors began doing the same. U.S. markets have added $6 trillion in value since the election, with investors around the world wanting in on America’s new growth story. The Federal Reserve Bank of Atlanta is now forecasting the third straight quarter of U.S. gross domestic product growth around 3%.
U.S. investors were sitting on their money.

And foreign investors were too.

Both went on a buying spree.

But this is not creating a bubble because the stocks have value.

She wrote:
Year One has been nothing short of excellent from an economic standpoint. Corporate earnings have risen and corporate behavior has changed, measured in greater capital investment. Businesspeople tell me that a new approach to regulation is a big factor. During President Obama’s final year in office the Federal Register, which contains new and proposed rules and regulations, ran to 95,894 pages, according to a Competitive Enterprise Institute report. This was the highest level in its history and 19% higher than the previous year’s 80,260 pages. The American Action Forum estimates the last administration burdened the economy with 549 million hours of compliance, averaging nearly five hours of paperwork for every full-time employee.
Behind these numbers are countless business owners who have told me they set aside cash for compliance, legal fees and other costs of regulation. That money could have been used to fund projects that strengthened their businesses. President Trump has charted a new course, prioritizing the removal of red tape and rolling back regulations through executive orders. The Federal Register page count is down 32% this year. Mr. Trump says red tape becomes “beautiful” when it is eliminated, and people who manage businesses certainly agree.
Not having to spend billions to jump through the latest bureaucratic hoops frees up money to invest in improving the product and production. U.S. productivity shot up 3% in the last quarter.

She wrote:
Much has changed this year. Companies from Broadcom to Boeing have announced they’ll move overseas jobs back to the U.S. American companies hold nearly $3 trillion overseas and may soon be able to bring that money home without punitive taxation. Businesses have begun to open up the purse strings, which is why things like commercial airline activity are rising substantially as executives seek new opportunities. Companies are looking to invest in growth.
Repatriation of profits is huge. I would give a one-year amnesty on the money and tax it at 10%. This would add money to the Treasury in the short term and add jobs in the long term.

We intuitively knew that Trump's election would boost the economy. Bartiromo just explained how it happened. Fascinating.

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Please enjoy my two books about the press and how it missed the rise of Donald Trump.

The first was "Trump the Press," which covered his nomination.

The second was "Trump the Establishment," which covered his election.

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As always, Make America Great Again.

13 comments:

  1. Obama administration policies were a heavy weight depressing the markets. Once that weight was removed the markets expanded back to a semblance of normal. As more money is invested and repatriated the velocity will increase even more. The markets are reponding so well to President Trump's policies that I would not be surprised to see some quarters growing at around 5 per cent. - Elric

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  2. Hemingway said that happiness is an anticipation of good things to come. Who was ever a happy investor, or even happy in any way, with the miserable Marxist in office? I cannot remember a day or an hour. There was always some sinsister threat in the air,like the low hum of a bomber approaching from far away. Yes, The market did rise on his watch but only because the Fed printed money so fast cash had almost no value as an investment tool unless it ended up in a tiny number of stocks. This moved averages but had almost no effect on confidence or jobs. Always lazy and self centered, he rode round and round the debt Ferris wheel, only becoming active at the end of his term, eager to forge every regulation his minions could imagine to encoil and smother his unexpected successor.
    Now he has taken a break from collecting large speaking fees and corporate payoffs from those he gave advantage to claim Trump's sucess as his own. Fortunately there are people of character and experience like Maria who know differently and are saying so.
    Some are even claiming that if there can be 4-5% growth, a Dow of 35000 is possible. I've lived through too many crashes to pay them much heed but I do know I have had more happy days with Trump in office than I expected. Long May he reign.

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  3. the libs can say it's coninkdink, but I have noticed I have more work in my field since the start of the year. I am self employed.

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  4. "dismisses the complaints of businessmen as lies from greedy little bastards."

    Is that the same economics professor that once said "you didn't build that"????

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  5. 549 million man hours on compliance = as much as $50 billion (with a b) in fully costed compliance costs. Now you're talking real money.

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  6. Obama and the left are claiming Trump is reaping the benefits of the growth platform Obama laid down. If that's the case, why is all the growth coming from REPEALING all the Obama initiatives? Or does Obama like Trump so much, he was willing to look like the worst economic president in US history so Trump can take the victory lap? That must be it.

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    1. Obama is responsible for the market increases after Trump took office...by depressing them before hand so that Trump's enthusiasm worked even better! Paullie "The Beard" Krugman worst hit.

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  7. Go check the Dow Futures...right now at 5:48 they are up 131.0 or so. If the Dow closes up for the month...it will be the first time ever...ever to record gains for 12 months in a row.
    Rhats on Trump optomism and nada to do with Obama.

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  8. And the morons in Alabama just elected a liberal Dimocrat to the Senate. Of course the morons in the Stupid Party helped the Dimocrats do that by virtue signaling about the fake allegations against more. In fact, it was prolly the cucks who started the allegations in the first place. - GOC

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  9. Yes, Big D - and thanks Maria. I went hard long on the Russell the day after the triumph. How'd it do today? PDG. Tools call this a bubble. I say the Bulls have gotten loose from their corrals. Freedom, prosperity, growth. The Proggies hate em all. Fuck the Proggies.

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    1. Oh, and BTW, after our ukulele club's gig at Immanuel's House in Martinsburg tonight, I stopped at Burger King for a post game Whopper. Call me crazy, but the bun looked bigger. The burger looked bigger. The toppings tasted fresher. Maybe it was a good store. Or maybe this is what it looks like when a company decides things are lookin good again!

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  10. $6T in newly created wealth. Fooking amazing.

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