Market Briefing For Friday, January 6

Internal consolidation for the S&P was actually welcomed and healthy. In addition, the market came back late in the day in stellar fashion too. Though we did not hit Dow 20k (which is hardly relevant and forthcoming at the same time nevertheless) the market's got it mostly right: ease back just a bit, consolidate in modest fashion, then move on up a bit more. From a technical perspective this is far preferred over any sort of blow-off spike.

So this 'is' the short-term bullish alternative. Digest gains and move higher. Of course the initial Oil weakness, which led the pullback after the API data we reported late last night, was offset (presumably) by Saudi Arabia keeping to the Production Cuts this month (for the moment anyway). The market is not penciling in 'trade restrictions' or 'protectionism'; so that's not entirely assimilated by the market; but so far the market acts when when confronted by nominal hints of problems in that area (like China's big-stick too remark earlier today). They have been too spoiled for too long and the U.S. has of course been far too timid for too long, or so it seems to most people. When you see how readily they are willing to cooperate with the inbound President here, it's a pretty good sign the outgoing boss could have done more.

That is on the Trade front. We have been indeed not playing on level fields. However, China and others have taxes on many of our products, which we have not reciprocated. Perhaps that's why you don't see too many protests over the President-elect using the 'advance bully pulpit' to extol the virtues of compelled manufacturing (or at least assembly) in the United States.

Both Ford and Toyota tell you a lot about how important the American auto market is to them, and indeed reveal a lot about how impotent policies have been for years, in terms of not restraining outsourcing and offshore plants. It has been my view that restoration of the abandoned macro U.S. industrial base (modern version) was not only the key attraction to voters in otherwise a miserable campaign; but is really an imperative for America's future if we are to remain (or regain) our predominant status as a producer not merely a consumer. Remember what I mentioned years ago: there is no Country that abandoned manufacturing 'stuff', and remained supreme decades later, just based on service or consumption industries. We advise having all of these.

The economy is absorbing all sort of matters better than the naysayers will suggest; and part of it is based on optimism; even from those who hated Mr. Trump (who didn't disdain his obnoxious language; but this is about platform and the willingness, which his persona seems to have, to engage all fighters against the resurgence of the USA while we still can do it). We're engaging as a Nation, and that's sort of exciting. The market likes it; manufacturers in solid ways are responding to it; the politicians sometimes say it's improper for a President (especially not in-office yet) to meddle in business, but as it proceeds to save jobs and retrieve factories I suspect complainers mostly are dismissed as grumbling, which is just about right. Who in their right mind would complain about more growth for the USA? Oh, globalists.

Obviously automakers have to maintain global manufacturing plants; but in my mind if several already make 'some' cars here (for US customers); and that includes BMW, Mercedes, and even Honda, which built more cars at it's Alabama, Indiana and Ohio facilities than it did in Japan..so I rest my case and that of the President-elect, versus those who call pressure to build here somehow anti-competitive or uneconomic.

Why would they cost jobs and of course lose share by building here as some Harvard Professors suggested today? The answer is they would NOT. They might do a lot better with 'just-in-time' product and parts deliveries. (Toyota, Missan, Subaru, Volkswagen are here; while BMW has been here for 20 years in South Caroline; Honda Civics from Marysville Ohio for 12 years.) We welcome more companies opening-up in the U.S.A. and we have the workforce to do it. How dare people say our low or unskilled workers are less capable of assembling cars or washing machines than those in Mexico or elsewhere? 

Bottom-line: There's no doubt the President-Elect is upstaging the President; but for what clearly is the good of the Nation as far as industry, like him or not. On the Russian story it's impossible to say if today's testimony was really just 'political' (no evidence provided; that's for next week), or whether the meeting tomorrow at Trump Tower will really be about ways for both Trump and the Intelligence 'chiefs' to mend fences and mutually 'save face'. My bet is the latter, with some effort at smoothing the confrontational nature of this up to now.

Of course if any of them desire retaining position that matters also, given that there was some degree of thinking not just about who sticks around. But a shifting of blame from candidates onto the Russians (rather than the content). One Senator is just too anxious to take on the Russians, and while they are thugs and have plenty to atone for, we need stability and the movement toward reconciliation, not confrontation. We hardly have the funds for servicing Debt and trying to seriously revive this country in a more dynamic way, let alone focus on military buildups that aren't going to come to a war with Russia anyway.