The Big Story: Corporate Profitability at Six-Year High
Jul 31, 2017
RUSH: I want to start with a couple of stories that may not move mountains in the daily perusal of the news. The first one here in the Wall Street Journal: “U.S. Companies Post Profit Growth Not Seen in Six Years.” Now, the reason I want to focus on this, folks, is because if you pay attention to the news, which I have often advised and suggested you not, then you would be forgiven for concluding the country is falling apart.
You would seem to be perfectly logical if, after a daily diet of news, you think everything is coming unglued and that we are in heap big trouble because Trump doesn’t seem to know what he’s doing and doesn’t have staff that’s loyal and whatsoever else that’s associated with this. The collusion story, which, by the way, more and more media outlets are now having to begrudgingly admit is falling apart. And you know why?
Jared Kushner’s statement after he came out of his so-called testimony before the committees. It’s interesting, some of the least expected or least anticipated things can carry huge amounts of weight. And Kushner coming out, saying what he said, and eventually ultimately saying that the real insult here is to Trump voters by saying their votes are irrelevant and votes don’t count. It was a powerful statement.
That story is starting — it is not ever gonna go away because the Democrats have too much invested in it, but the weight of it and the credibility behind it is beginning to wane now. Health care I think is still something that’s at the top of many people’s minds and especially the betrayal of John McCain.
Sadly, McCain’s behavior on the floor of the Senate and his vote, which is in direct contradiction to promises he’s made on the campaign trail, unfortunate to have to say this, but McCain’s actions and his vote give credence to much of the criticism McCain has faced throughout his political career, it validates it.
That vote on health care, he runs for office telling people, you know, in a contested race, that repealing Obamacare has to happen. Nothing is more important. We’ve got to do it. It’s the scourge of the land. And when the time came to do it, McCain thumbs down, and the media and the left embrace him. And it was clear to me, and in a human sense you almost can understand it, this was Trump’s payback. It contains payback for Trump’s comments about him on the campaign trail shortly after he announced.
But back to the profitability story here. I realize that there are a lot of young people who are not gonna be impressed by this, a lot of people who have been force-fed education from the left, have been raised to hate companies, to hate corporations. That they’re all evil, that they hate their customers, that they kill their customers, that they screw their customers, that they’re destroying the planet, you know the gamut of things said.
And in this atmosphere of media coverage that suggests the country is in a nosedive, that we are in the midst of chaos and calamity, the fact of the matter is, that out there in the real world where commerce takes place, commerce that is related to and encourages the increasing standard of living of people, where actual life is occurring.
See, I don’t think Washington, D.C., is actual life. I mean, people are alive there, and they’re living, but it’s disconnected to daily life in the rest of the country. And the evidence for that is just watch the news every day. And you’ll find out that what is interesting to people in the news often is not interesting to you and certainly is not relevant. If anything, it’s a distraction or it’s the equivalent of reading gossip magazines and articles and so forth.
But out in the real world there are real things happening that affect real people, and the real things happening happen to be pretty good. Strong earnings. “U.S. Companies Post Profit Growth Not Seen in Six Years — America’s largest companies are on pace to post two consecutive quarters of double-digit profit growth for the first time since 2011, helped by years of cost-cutting, a weaker dollar and stronger consumer spending,” which is related to stronger consumer confidence.
2011 is six years ago. We never got headlines like this during the Obama administration because headlines like this were not the objective. “Profit growth” was not something Obama and his people were interested in, unless (outside chance) the profit was associated with major Obama donors, and then the profit was tolerated and not targeted. But for the most part, Obama and the Democrats have been targeting profit politically all of my life as an evil thing.
And they have been educating our kids to believe that profit is an evil thing, that it denies people things. Profit benefits corporations and corporations hate people is the basic theme. “Earnings at S&P 500 companies are expected to rise 11% in the second quarter” which ends today, “according to data from Thomson Reuters, following a 15% increase in the first quarter. Close to 60% of the firms in the index have reported second-quarter results so far.” A bunch of them starting tomorrow, Apple among them.
“Corporate America’s strong earnings performance comes as several policy initiatives that were expected to help boost companies’ bottom line — corporate-tax cuts and increased government spending on infrastructure — have been sidetracked,” even though those things haven’t happened. And then you throw in what “culminated with the recent failure of the health-law bill.” You throw that in — and that it is still happening. There have to be reasons for it.
“The second-quarter profit gains are spread across industries from Wall Street banks to Detroit’s car factories to Silicon Valley’s software labs. Earnings are expected to decline only in the utilities sector…” I wonder: What is dominant in “the utilities sector”? How do utilities fail? Everybody has to have ’em. The government regulates ’em, but what is it that could possibly explain utilities failing? I would think it would probably be green energy in that such as all of this time and money wasted in solar and even greater time and money wasted in wind.
“Companies also continue to reap the fruits of their recent zeal for cutting costs, [Christopher Probyn, chief economist for State Street Global Advisors] said. ‘We underestimated some of the cost-cutting and restructuring that has gone on within the various industries; that has permitted earnings to keep doing well.’ Sales, too, rose in the quarter, by an expected 5%, the second-biggest increase in more than five years…” So it makes you wonder what could happen if the Senate and if the Congress could actually get out of Trump’s way and work with him.
Imagine if there actually has been a repeal and replace of Obamacare and imagine if we really would get tax reform, which Newt Gingrich says: If we don’t, then it’s sayonara for a lot of people. (Newt’s actively engaged on this.) “Gingrich: 2018 Election Could Be ‘Tough’ If No Tax Reform By Thanksgiving.” Now, many of these companies — you know as well as I do — have been anticipating this happening.
They have been anticipating much of the Trump agenda, and they have been pre-investing in it, assuming that business circumstances are going to exist after major tax cut reform. And many people are still invested in the idea. They haven’t given up on it. The failure to repeal Obamacare’s got everybody thinking that no legislation’s gonna happen and this is leading people to analyze why no legislation is gonna happen. The more people that begin to think that legislation’s tied up, such as tax reform or health care reform…
If that’s tied up simply because a bunch of insiders simply want to deny Trump’s success, then there’s gonna be hell to play. Everybody is trying to blame Trump in the media and in the establishment. They’re trying to blame all of this dysfunction, if you will, on Trump for not knowing what he’s doing, for not having decent liaisons from the White House to Capitol Hill, for not being a great negotiator, not knowing a thing about the art of the deal, not even knowing what’s in the legislation. The lists of criticisms aimed at Trump are endless.
But, as far as the American public is concerned, Trump’s out there trying to get this stuff done. That’s what they see, and they see a dysfunctional Senate. They see candidates who promised things all during campaigns and when it comes time for the pedal to hit the metal or the rubber to hit the road? Nada. Nothing happened. But while all this is happening, there is profit growth, and with profit growth comes economic growth. With profit growth comes new jobs. Now, as I say, much of our country has been educated to resent news like this.
Much of our country has been taught and educated — propagandized — to think this is scandalous. If a company’s doing well, that’s unfair, because companies are not people! Corporations are not people, and when corporations are doing well, it automatically must mean — to young people who’ve never been taught critical thinking — that everybody else has to be doing bad. Because to them, life is a zero-sum game. That’s why these stories are important.
Now, there’s a companion story to this. It is a Pew poll I found from Breitbart. “Most Americans Say the Democrat Party Has Become Too Statist.” By the way, this is why I love it when Trump’s out there doing his rallies. You’ve probably heard him say, “In America we don’t worship government; we worship God.” This is a twofer in the sense that both assertions literally cause insanity among Democrats and leftists. A, they do worship government, and, B, they don’t believe in God.
There’s even a C: They really hate people who do. They mock them; they make fun of them. People who make it known that they are deeply religious, devoutly religious, believe in God? Those are problematic people to people on the left. So here comes Trump dropping these little miniature nuclear political bombs every time he makes that statement. The Pew survey was conducted throughout the summer. Of 2,504 adults 18 years of age or older, 61% of Americans see the Democrat Party as too government centered.
Now, I know what some of you are thinking; it’s hard not to be cynical here. The fact of the matter is, I remind you again at my own great peril: Democrats continue to lose elections, don’t they? Despite — despite — the betrayal of the Republicans. Despite the claims of the Republicans to execute their promises and the failure to do so, the Democrats continue to lose elections. I will bravely predict that they’re going to continue to lose elections. I’ve seen stories in the last couple of weeks about their new campaign slogan.
Better jobs, better wages, better future, better whatever. Everything they’re doing — their phraseology, if you don’t dig deep into it — sounds moderate to conservative. Hillary Clinton had nothing to campaign on. You know, people mistakenly say that she had no message. She had such a message; it was rejected. This is the thing that you have to keep in mind. Whenever you hear the media or any election analyst say, “Well, of course Hillary lost.
“She was a lousy candidate. She had no message. She couldn’t tell anybody why she wanted to run.” That’s partially true. She couldn’t tell anybody because if she had she would have lost by an even larger margin. Don’t think the Democrats don’t have a message. Don’t think the Democrats are wandering aimlessly through the desert desperately trying to find an agenda. They’ve got one. They just don’t dare bear it. They just don’t dare tell people what it is.
And even despite that, people have picked up on it, as this Pew poll indicates. Of that 2,504 (a big sample) 18 years of age or older, 61% (a big number in any poll) “see the Democrat Party as too government centered, believing the state should be the only recourse for solving problems in society.” I think it’s great that so many Americans see the Democrat Party that way, critically. Sixty-one percent essentially say the Democrat Party’s become too statist.
The Democrat Party believes that the state, the government, should be the only recourse for solving problems. People think that’s what the Democrats stand for, and they heartily disapprove of it. “Among those surveyed, even substantial numbers of those describing themselves as Democrats or liberals believe the Democrat Party’s gone too far in turning to the government as the universal problem solver.” Do you know even single payer is having trouble in deep, dark blue, purple places? Jake Tapper really took it to Crazy Bernie yesterday on this.
I don’t know how many people ever expected this great to have the White House, the House, the Senate, this latest polling data. There’s a reason for the profitability, folks. You know, we’ve had so much massive government regulation — which is, in fact, the definition of a massively big and growing government. The Pew study suggests that a significant majority of Americans, 61%, are sick of it. They’re tired of it. They don’t like the idea of the government being the single go-to source for solutions, for answers, for benefits, for whatever you have in life.
What never gets reported is that Trump is cutting regulations like a zombie. He makes mention of this at every one of his rallies, but it never gets covered beyond that because it’s not something the left wants to highlight because it’s working. Cutting regulations — you know, small, little chunks of government being carved out — is leading to increased productivity and profitability, which leads to more jobs and a higher standard of living. None of this is ever gonna make news. His cabinet officials have done this throughout various actions that they have taken. That’s why this news, to me, is big today. We need more of it.
RUSH: We got Tom on the phone here in Williamsport. Is it Williamsport, Maryland, or Pennsylvania, Tom?
CALLER: It’s Maryland, buddy. How you doing?
RUSH: Good, good. It’s great to have you with us. What’s up? What’s happening? What’s shaking?
CALLER: When I flipped on the radio today, I heard you talking about the economy and thought I’d give you a little insight from somebody out here on the front lines. I’m a one-truck owner/operator. And I’ll tell you what, Rush. There’s more freight out here than any of us know what to do with, and I’ll guarantee you it doesn’t all get moved in one day like they want. You know, there’s just so many loads out here right now. It’s unbelievable. I get hounded.
RUSH: You mean there’s a lot of commerce going on, a lot of people shipping, more than you can handle?
CALLER: Oh, yeah! Oh, yeah. Oh, yeah. It’s looking pretty good right now.
RUSH: Well, that doesn’t happen during recessions.
CALLER: No, it doesn’t. I’ll tell you what: I got my truck and trailer up for sale, and the reason I got it up for sale is all the red tape involved in this business and the bureaucratic nonsense that goes with it is just… It’s absurd. So I’m just gonna alleviate the problem. I’ll go back to working for somebody else, much as I like doing this. But I’ll go back to avoid that because every time you turn around, somebody’s trying to put their hand in your pocket.
RUSH: Like pickpockets.
CALLER: Yeah. It’s crazy. If it’s not coming from the state, it’s coming from the federal side. It’s just nutty. I mean, the amount of regulations you gotta comply with on this stuff is just out of hand.
RUSH: Look, I don’t mean to sound like a sycophant, but Trump is taking an axe to all kinds of regulations. There are tons of them that he’s done away with, and he’s not stopping, and I have no doubt that the regulations that you’re talking about here on interstate commerce are gonna be dealt with too. We’re still in the first seven, eight months of Trump administration, and this is one of his signature things. When he goes out and does a rally, these are the kinds of things that he touts as success stories.
I’m not telling you that to say hold on or change your mind. I’m just… You put a pile of money out there and people in Washington instinctively want it, and think that a portion of it is theirs. They have nothing to do with creating it, nothing to do with the ingenuity or the entrepreneurism that created it. But they deserve it. They want to “dip their beak” in it, I think is the term. I’m sorry to hear that, Tom. Here’s a guy that’s an over-the-road trucker in a great economy and wants to get out because it’s filled with red tape and regulations. I hear you.