Trump claimed credit for a deal in which former Indiana state governor Pence agreed to give United Technologies Corp $7million tax breaks to keep around 1,000 jobs at Carrier. The air conditioner maker will still send an estimated 1,300 jobs there. Now Rexnord - again in Indiana. Why always in Indiana? Is it because Pence is from there?
This is a really on point question. Very interesting.
Let us battle false facts first. Pence did not agree to any deal. That is just plain false as he has no authority to and corps do not go around making deals with folks with no authority -- it just does not happen even in 3rd world despot regimes.
One has to gain a little understanding of "press releases" by corporations to add value to stock prices. It is convoluted at best. UTX has some issues and we can note that the stock only stabilized with the news about a Trump deal and it would also stabilize with the movement of jobs overseas. Nobody gained on this conceived deal. Maybe some shorts but nothing real heavy.
Carrier, Trump and Pence picked a situation that had no real value, but looked good for the press. Smart move.
If you kick the media hype to the curb and actually look at stock long and short you see other US companies getting a bigger bump. It is what we call a climate. It is like the bull and the bear -- pretty much all perception. Did I pull my stock out of coal because of Hillary? No way. Did I buy Trump stock because of the election? No it is privately held but did I double down on Exxon and Apple? Probably good picks.
We are not looking "deals", that is hyperbole.
It is a statement of intention. In biz we call those "letters of Intention" and they are not binding except when followed by non-disclosure agreements and actual money changing hands.
Business is heartened by these developments. But ain't no CEO changing plans at this point of a make of break concept.
China and Mexico are the big losers. But be sure they will sweeten any pot now that the gauntlet has been thrown down. If Trump fizzles in this regard it will still make those overseas deals better for US corps and stock issues. Tough talk is good right now. There was just a stock that went up because China agreed to lower the nut just to keep the biz. That lowers the price of Depends.
Will this have a trickle up regarding our national debt -- real damn likely.
Hate the guy, love the guy. It is time to bust out and invest, and that is good for everyone's pension and the Soc. Sec. issues.
It is not a swift exec order, it is restoring order. It changes that game from "I take your money in PACs" to "we invite you to stay and if you don't here is a swift kick in the ass" "bring your crap back across our border and get stung hard".
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