Is the Market Saying Globalism is Beating Trumpism?

Apple CEO, Tim Cook, spoke in China over the weekend, where the company is opening a new research center. And he took on the notion of globalism and said it is something that should not be rejected. 

Mr. Cook acknowledged gains aren’t evenly distributed within certain nations; however, he proclaimed globalization “in general is great for the world.”

He further stated…I think the worst thing would be to—because it didn’t help everyone—is to say it’s bad and do less of that. The reality is you can see that countries in the world…that isolate themselves, it’s not good for their people.

On another note; yesterday, the world’s richest man and globalist, Bill Gates met with President Trump. While details have yet to be released, a spokesperson for the Gates Foundation emailed that the conversation focused on developing initiatives in global health development and domestic education. 

In addition, Apple shares (APPL) hit an all-time high yesterday; there were additional market signals that Globalism is winning. 

Caterpillar Climbs Out of the Hole

Q. When is bad news good news?

A. When the bad news has been the best news for a long time.

Caterpillar’s (CAT) worldwide retails sales were down just one percent in February, the best monthly performance since December 2012.  This makes three consecutive monthly improvements, suggesting an inflection point occurring between November and December. The strength is concentrated in the Asia-Pacific Region where construction was up 52%.  Resource businesses in Europe, Africa, and the Middle East (EAME) were also up 16%.

This is a company that has been lauded by the Trump administration with the President himself visiting a Caterpillar retailer; and yet, the Justice Department raided an office in its pursuit of taxes apparently associated with overseas operations.   

Ironically, the company found itself in the crosshairs of President Obama, to the point of a couple of public dust-ups, forcing management to show hiring and firing distinctions among the domestic and international workforces.

We continue to believe the stock is extremely undervalued, and once the cloud of tax-rigging allegations clears, it could spurt above $100 quickly.

This year, the stock market has been all about globalism as the NASDAQ has come on like gangbusters, up 9.6% while the American-centric Russell 2000 has struggled and is up less than 2%.

Overall, the broad market has stalled. The question is “What is the message of the market?” The answer is digesting gains for the moment.  As for isolationism, it’s always been a bad thing, eventually making great empires such as China and Japan vulnerable as the world passed them by during their slumber.  Yes, we need better deals, and we need to open foreign markets even more.

I think we’ll have them, but free trade simply means an exchange of goods and services at an agreed price.

 

Today’s Session

This morning Lennar (LEN), one of the nation’s largest homebuilders, posted its earnings results. They were mixed with respect to expectations, but the CEO offered a clear message on how surging sentiment is materializing into reality.

Stuart Miller, Chief Executive Officer of Lennar Corporation, said, "We are pleased to announce our first quarter results as we achieved net earnings of $130.8 million, or $0.56 earnings per diluted share. These solid results were supported by an improving macroeconomic environment following last year's election. Since November we have seen a combination of renewed optimism, wage and job growth, and consumer confidence. As a result, our homebuilding operations have gone from slow and steady to a faster than expected sales pace throughout our first quarter. In this environment of accelerating sales pace, together with limited land and labor, and tight inventory particularly at the lower price points, we believe we are positioned for increased pricing power and solid earnings going forward."

Note: The company revenue accelerated for the second consecutive quarter, but operating cost increased, which included higher prices to sell homes, land and SGA costs.

The market may open slightly higher, but I’m not taking the bait out the gate.  I continue to say be prepared to build out additional positions.  Meanwhile, make sure your trackers are updated.  Touch base with your rep or the research desk.  If you do not currently subscribe to our Hotline Service, email us at info@wstreet.com. 

Comments

America First with fair trade jim henderson on 3/21/2017 10:06:23 AM

The answer, If you are realistic, is very complicated. Simplistic answers don't get to the nature of the world, and love for all. There are countries out there that let groups in their country starve and other groups kill their own people. So to begin at the point of corporations and what is good for America and Business to me is off base. We throw away enough food every day in America to feed a good portion of the starving in the world. So does Europe. Ideally we can solve that problem. China should be building homes and cites for the poor and starving in tents and slums in India and Mexico, and Anywhere else since they are so good at it. But we don't share enough or with alignment in this world so how is that possible. There would need to be give and take. It takes an Elon Musk to figure it out. Thinking bigger and More Globally is essential, but we're going about it all wrong, Selfishly, for Profit or tax. Both political parties in the U.S. now look almost completely corrupt. That's why an outsider won. Not sure how the Bridge from here to there will ever be built as selfish we as people are. The wealth in Atlanta alone, and chronic waste of people pursuing luxury with 10,000 to 20,000 Square foot homes is insanity. Not the answer you're looking for. But an answer. Not judging, just fact. Bigger Better More, is sure to lead to...where we are. Craig Gregozeski on 3/21/2017 10:06:52 AM

Respectfully, Mr Gregozeski, globalism isn't the answer. The government (federal, CA state and local) takes nearly 60 percent of my income in various forms of taxes and fees (I make a modest living). "We don't share enough" is patently absurd! We are the most generous nation on earth. The left's idea of "sharing" is confiscation at the muzzle of a gun and redistribution as the elites see fit. I still find money to donate, there would be much more donation if I had more of MY OWN MONEY left on April 15th. kev on 3/21/2017 10:39:23 AM

Isolationism today is sensible in the same way riding a horse to work on the I-5 is sensible. Engagement with the world should begin with the reminder that those governing this country govern this country. This country's interests must remain first. This country's interests will often be the same as international interests, but when they don't, we're first. Patricia Flynn on 3/21/2017 11:12:04 AM

Fair trade with both parties getting just exchange prices. Easier said than done. We skew our pricing to get cheaper imports so that our people can spend more.We do not take the steps necsessary to get our house in order spend less, balance our budgets etc. Our congress is totally out of the main stream and init for themselves. They are not in ACA nor will they be in the new version of ACA they retire at 100% of salary after one term they will not vote themselves term limits They will not police, cap or hinder themselves for the benefit of the country they have become an elite class unto themselves James Cuff on 3/21/2017 11:17:49 AM

So Craig, you're suggesting we change human nature? K Makinney on 3/21/2017 1:09:05 PM

I am curious as to the CA prominent Democrats associated with Lennar Homes and the below market value purchase of the Bay Area jewel, Treasure Island. TI has its own on and off ramp from the Bay Bridge, spectacular views of SF & GG Bridge. Anyone interested in this connection? The SF Appraisal Institute MAI panel suggested that the purchase per acre was far below Fair Market Value. Understand that Willie Brown, Feinstein, Boxer, Pelosi and others have relatives benefiting from this deal. john imsdahl on 3/21/2017 1:30:21 PM

This is very interesting John so much self-dealing among these politicians (especially "progressives"). Charles Payne on 3/21/2017 2:38:35 PM

Free but fair trade with nations unilaterally, no one size fits all TPP or Nafta or Cafta. US should ALWAYS consider first its best interest and negotiate from that starting point. Place your stop loss position and walk away. No red lines you violate to continue chasing a bad deal just to own it. Globalism is inevitable but at what cost. The peace and prosperity, sharing of resources, caring for and feeding and housing the poor though noble pursuits are largely unattainable because of the nature of man. Throughout life on the plant "the strong survive while the weak ones fade, empty pockets never make the grade" Blood Sweat & Tears. The globalist have overreached in there haste to control and slowly the people awaken. Egos, the pursuit of power and the inability of the elitist to know "when is enough enough?" The yearning for boundaries, safety and ones own culture will continue to cause major conflict around the globe. Arab spring, Brexit, Sweden, Germany, France, it's only just begun. Globalism is here but it's not the utopia touted, it's chaos and conflict. I'm 69 years old, Vietnam vet, father of 2, grandfather of 4 and OMG what an exciting time to be alive! Beach Bum on 3/21/2017 2:04:09 PM

Wrong question. And wrong answer by Mr. Gregozeski. First, Mr G wants everyone to be more charitable, but he wants that to be from rich nations to poor nations. Can he give even one example of that working? Charity is wonderful and commanded by God, but as individuals, not nations. When charity is structured to happen large scale, it involves government. Government run charity leads to growing sloth and lower living conditions for most everyone. As to the question of isolationism or job protection with free markets; that is just a question of degrees. Free ALWAYS exist, it is just a matter of adjusting to the interference. Isolationism is effected by tariffs, which translates simply to higher income for the government at the expense of the people. Bigger government does not translate to greater freedom or prosperity for anyone except the eventual fascist leaders. Bob G on 3/21/2017 9:34:18 PM

Look at the EU as a mini global structure and it is failing. Those of us in the mid-west are referred to by the elites in Washington, New York and California as the fly over states, unimportant, insignificant. We are tired of being ignored. We want America first, Fair trade and less government not larger. Leslie Newhouse on 3/21/2017 11:05:10 PM

Andrew Carnegie built over 2,800 libraries all over the country. founded one of the world’s great research universities and established charitable organizations that are still active a century after his death. His example has influenced Gates, Buffet, Cook and many wealthy others to leave their great wealth is WELL RUN (read: not government run from any level) philanthropic organizations. The greatest gift we can endow the world is the concept individual freedom, self initiative, innovation and empowerment of the individual. Free and fair trade, an economically strong United States creating an economic environment that spawns great wealth that is used philanthropically to battle the great needs of the world from food & shelter to the Arts. Jim Sands on 3/24/2017 7:17:05 PM

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