Trump Administration: Has The Donald Gone Legit?

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Trump Administration: Has The Donald Gone Legit?

Donald Trump shocked the world with his victory in the U.S. presidential contest. He’s about to shock voters with his Establishment-flavored personnel and policy priorities.

As we noted in last Friday’s issue, Donald Trump recognized the requirement that to govern in the United States, first you have to win an election.

And the work he did to put together a winning coalition is genius level.

He basically flipped the Obama hope-and-change script, turning Florida, Iowa, Michigan, Ohio, Pennsylvania, and Wisconsin from blue to red by stoking a mix of anger and fear.

I’ve seen this expression already, as I’m sure many of you have, probably in some social media meme. It’s another monumental culture-referencing color change: Orange is indeed the new black.

The mainstream media and a large segment of the electorate would say he’s an idiot-savant.

Nevertheless, today he’s Mr. President-elect. No longer on the campaign trail, he’s now preparing to go inside the Beltway.

And my, things have changed . . .   again.

Let’s start with a genuinely constructive — magnanimous, even — tweet the president-elect issued early last Friday morning, in the wake of multiple protests around the country:

Love the fact that the small groups of protesters last night have passion for our great country. We will all come together and be proud!

At the same time, some of Trump’s main people and major policies may surprise his most vocal partisans.

Indeed, as Winston Churchill said to Joseph Stalin while discussing the Allied invasion of Europe during the 1943 Tehran Conference, “In wartime, truth is so precious that she should always be attended by a bodyguard of lies.”

Nevertheless, today he’s Mr. President-elect. No longer on the campaign trail, he’s now preparing to go inside the Beltway.

So, too, the way-cagier-than-we-thought Trump seems to be demonstrating, in politics.

Voters pissed at the Establishment and anxious about a future when the recent past has already left them behind might be — should be — alarmed by at least one of the names floated for a top slot in this newest, most critical Trump corporation.

It’s Jamie Dimon, chairman and CEO of JPMorgan Chase (JPM), late of American Express Co. (AXP) and Citigroup (C), once a potential nominee for Treasury Secretary in the first Obama administration, and now, according to CNBC, a potential nominee for Treasury Secretary in the first Trump administration.

He’s a consummate Wall Street elitist — indeed, the capo di tutti capi (“boss of all bosses”) up there.

Alan “Ace” Greenberg, the late Bear Stearns chairman and CEO and “one of the most illustrious Wall Street personalities of all time,” once said when asked about attempts to rein in Wall Street, “I feel about Dodd’s bill and the other legislation, exact how Jamie Dimon feels.”

And how was that? “I don’t know, but however he feels is how I feel.”

Warren Buffett wrote the foreword to Greenberg’s 1996 book, Memos From a Chairman, a collection of his famous notes to employees. He wrote, “Ace Greenberg does almost everything better than I do: bridge, magic tricks, dog training, arbitrage — all of the important things in life.”

“If Alan represents me on something, nobody else is going to know about it. He’s extremely close-mouthed.” That was Donald Trump praising Greenberg, who attended the president-elect’s 1993 wedding to Marla Maples.

Though he hasn’t passed through it (yet) himself, Dimon, who also served on the board of directors of the Federal Reserve Bank of New York, knows how to meet, greet, and treat those who travel the Wall Street-Washington, D.C., wormhole.

Signs of a moderating appeared during Trump’s first moments in public as president-elect.

He was stunningly gracious toward “Crooked” Hillary Clinton.

And one of the first things he mentioned in his victory speech, from a policy perspective, was “infrastructure” — which, by the way, was a cornerstone of Clinton’s economic plan.

Signs of a moderating appeared during Trump’s first moments in public as president-elect.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” said Trump. “We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”

We’ll see how much of that gets through a Congress populated by “movement conservatives” fixed on “small government,” cutting spending, and managing a budget like a household must. But maybe those were only Obama-era principles.

Still, combined with Trump’s commitment to cutting taxes and boosting defense spending, a top-of-mind focus on “highways, bridges, tunnels, airports, schools, hospitals” spells more debt and bigger deficits.

Plus ça change, plus c’est la même chose. (“The more it changes, the more it’s the same thing.”)

“Second to none” infrastructure, in addition to Trump’s items, should include an expanded effort to build a hack-proof quantum network.

As we detailed in the October 31 Wall Street Daily column, China is making impressive progress toward such a communications system.

According to the University of Waterloo Institute for Quantum Computing, “Quantum computing is essentially harnessing and exploiting the amazing laws of quantum mechanics to process information.”

And it has the potential to neuter those who would perpetrate the types of cyber-attacks that crippled the internet on October 21 with a distributed denial-of-service (DDoS) attack on one of the largest Domain Name System (DNS) service providers in the world.

It will help us secure the Internet of Things, which is expanding at an incredibly rapid pace and opening up vulnerabilities at a similarly incredible pace.

Still, combined with Trump’s commitment to cutting taxes and boosting defense spending, a top-of-mind focus on “highways, bridges, tunnels, airports, schools, hospitals” spells more debt and bigger deficits.

It’s also a matter of national security, a way to harden communications infrastructure against nation-states, terrorists, and criminals who, in an era of “blended threats,” combine to penetrate government and corporate networks to do us harm.

On top of what we reported on October 31, IEEE Spectrum reported on November 8 that researchers at MIT and Harvard have taken what may be another “significant step toward realizing quantum computing.”

According to a paper published November 3 in the journal Science:

The realization of large-scale fully controllable quantum systems is an exciting frontier in modern physical science. We use atom-by-atom assembly to implement a platform for the deterministic preparation of regular one-dimensional arrays of individually controlled cold atoms. In our approach, a measurement and feedback procedure eliminates the entropy associated with probabilistic trap occupation and results in defect-free arrays of over 50 atoms in less than 400 milliseconds. The technique is based on fast, real-time control of 100 optical tweezers, which we use to arrange atoms in desired geometric patterns and to maintain these configurations by replacing lost atoms with surplus atoms from a reservoir. This bottom-up approach may enable controlled engineering of scalable many-body systems for quantum information processing, quantum simulations, and precision measurements.

The big leap forward here is that using “optical tweezers” enabled the use of neutral atoms, or atoms with no electrical charge. Qubit particles — until now the basis of quantum computing — are much easier to trap due to their charge.

But neutral atoms can be placed closer together. And the MIT-Harvard team has also solved the problem of trapping them using a laser beam.

As IEEE Spectrum notes:

Once the atoms are trapped in this way, they begin to emit light, making it possible for a charged-coupled-device (CCD) camera to capture an image of it. From the images, the researchers were able to determine which of the laser beams had successfully captured an atom and which were empty. The researchers were able to essentially switch off those beams that did not have an atom by selecting certain radio frequencies. In those beams’ place, they put the ones with atoms, yielding a defect-free array of atoms. In this way, the researchers achieved a maximum of 50 atoms that were held in place for a few seconds.

A neutral atom can complete 100,000 quantum operations per second.

The next step is establishing quantum gates, or “logic operations that occur between two quantum bits that are similar to logic gates in regular computer circuits,” using neutral atoms. This would be a first.

A guy like Donald Trump oughta be able to see the genius in all this.

Upticks, Downticks

Yes, it’s a (ridiculously) small sample size, but the Trump Era has so far been incredibly kind to small-cap stocks. The Russell 2000 has posted a 7.2% rally over the three trading days since it became clear that Donald Trump would win the presidency. The main small-cap index is now just 14 points away from its all-time high of 1,296.

According to the November 8 U.S. Department of Labor’s Job Openings and Labor Turnover Survey (JOLTS) report, the seasonally adjusted layoff rate slipped to a record low of 1.474 million in September from 1.692 million in August and 1.842 million a year ago. But the hiring rate was also lower, at a seasonally adjusted 5.081 million, down from 5.268 million in August and 5.131 million a year ago.

According to FactSet, as of November 11, with 91% of S&P 500 companies reporting, 71% have reported earnings above the mean estimate and 55% have reported sales above the mean estimate. The blended earnings growth rate for the S&P 500 is 2.9%. This is the first time the S&P 500 has posted year-over-year earnings growth since the first quarter of 2015.

The Labor Department reported on November 10 that seasonally adjusted initial claims for unemployment insurance were down by 11,000 to 254,000 for the week ending November 5. Analysts were expecting 260,000.

The University of Michigan Index of Consumer Sentiment for November surged 5.0% from October to 91.6, its highest level since mid-2016, on an improved outlook for the economy. The Sentiment Index is 0.3% higher than it was a year ago.

The Chicago Board of Options Exchange Volatility Index (VIX), often cited as the “Fear Gauge,” has eased back to 14.74, a decline of 34.5% from a Friday, November 4, close of 22.51.

The 2016 Presidential Election Campaign is over.

The 2020 Presidential Election Campaign is just getting started.

No more “First Lady Bill Clinton” jokes.

No more “First Lady Bill Clinton” jokes.

Smart Investing,

David Dittman
Editorial Director, Wall Street Daily

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By David Dittman