Analysis | The Finance 202: ‘We’re jittery right now.’ Amazon sell-off reflects market’s sensitivity to Trump headlines


In case anybody needed a clearer message that Wall Street is newly keyed in to risks out of Washington, President Trump’s private fuming over Amazon just torched more than $31 billion of the company’s market value. 

The online retail giant’s stock tanked Wednesday following an Axios report that Trump is “obsessed” with the company and muses about targeting its tax treatment or building an antitrust case against it. Amazon shares fell as much as 7.4 percent before recovering somewhat to close down 4 percent.

The report shouldn’t have surprised the market, but the president’s gripes point to potentially serious challenges for the company

Market watchers fit the investor freakout into a broader turn against highflying tech giants that are coming in for new regulatory scrutiny. Before the Amazon sell-off, the Facebook user-data controversy and the fallout from a driverless Uber test car involved in a fatal crash have dragged stocks lower in the past several days. 

“We’re jittery right now,” says Wolfe Research managing director Scott Mushkin, who covers Amazon’s stock. “Stocks have been higher since the election, and there’s been a lot of euphoria over the corporate tax cuts. But the general concern around the growing power of the tech sector and what the government may do about it has been an undertone for a while … There’s nothing fundamentally that’s changed today from yesterday.” 

Indeed, what’s odd about the revelation of Trump’s Amazon fixation is that it isn’t new by any stretch. Trump has laid out the main thrust of his beef — with the company, with Amazon founder and chief executive Jeffrey P. Bezos, and with The Washington Post, which Bezos owns — to seemingly anyone who has asked and to many who haven’t. 

Trump acknowledged as much in a tweet this morning:

And he has devoted copious tweets to the subject, dating back to the campaign: 

And Trump has made no secret elsewhere of his belief that Amazon should face tax and antitrust recriminations. “Every hour we’re getting calls from reporters from The Washington Post asking ridiculous questions,” the then-presidential candidate told Fox News’s Sean Hannity in May 2016. “And I will tell you, this is owned as a toy by Jeff Bezos … Amazon is getting away with murder, tax-wise. He’s using The Washington Post for power so that the politicians in Washington don’t tax Amazon like they should be taxed.” Trump added that Bezos has “a huge antitrust problem because he’s controlling so much … He’s using The Washington Post, which is peanuts, he’s using that for political purposes to save Amazon in terms of taxes and in terms of antitrust.”

We’ve also known that Trump has brought up the subject in private conversation. In December, hedge fund billionaire Leon Cooperman, appearing on CNBC, said the president raised the issue with him at a White House dinner with business chiefs last summer. “Twice he asked me if I thought Amazon was a monopoly,” Cooperman said. “I said, ‘No, Mr. President, I don’t think it is. I think they’ve out-executed people and done a very good job.’ “

But Trump’s bluster hasn’t amounted to trouble for Amazon in Washington — at least not yet. The Trump administration could have raised antitrust objections to Amazon’s acquisition of Whole Foods last summer. And there were whispers among antitrust lawyers at the time that although there was no case to be made on the merits, the merger could face static if the president took an interest. Instead it won swift approval from the Federal Trade Commission. 

Yet it may be that Trump’s anti-Amazon animus, however self-interested and ill-informed, heralds a wider political reckoning with the power that tech giants have amassed. “Disruptive companies are bound to make powerful enemies in old industries, but the tech companies have alienated many natural supporters among the wider public through their swagger, wealth and tax avoidance,” The Wall Street Journal’s James Mackintosh writes. “Businesses that were once beloved by consumers for taking on the corporate establishment have become the corporate establishment in the eyes of many of their customers.”

Most immediately, the European Union is considering a proposal to impose a new 3 percent tax on tech giants that would generate an estimated $6.2 billion from the likes of Facebook, Google and Amazon.

Closer to home, Amazon’s growing retail dominance could provoke a costly federal response down the line. The question is already stirring debate among economists and legal scholars — as Democrats consider whether to build their economic platform on a broader antimonopoly message. “We view the combination of its assets and the firm’s intellectual knowledge as creating an enterprise that will be unrivaled in the marketplace,” Mushkin wrote in a recent research note. “How government entities respond to this market power may be the greatest risk to the equity over the longer-term.”

PROGRAMMING NOTE: We’re on a recess schedule so we’ll see you back here Tuesday. And here’s hoping you’re likewise getting a minute to recharge.


GDP’s upside surprise. The Post’s Heather Long: “The U.S. economy expanded at a rate of 2.9 percent in the fourth quarter, the Commerce Department reported Wednesday, much better than Wall Street analysts expected and very close to [Trump]’s goal of 3 percent growth. The strong growth came largely from Americans opening their wallets to spend more. Consumption accounts for about 70 percent of the U.S. economy, and as more Americans get jobs, they are able to buy more online and at stores. Businesses also boosted their spending at the end of last year, beefing up their inventories as executives expect sales to pick up. There was also more federal government spending, especially on defense, according to the report.

“The new estimate revises the government’s previous estimate for growth from October through December, which was 2.5 percent. The jump to 2.9 percent growth was better than economists expected and means that the U.S. economy grew at an average pace of 3.1 percent from April through December of last year, a fact the Trump administration is likely to tout as evidence its economic policies are working.”

Corporate profits on a roll. CNBC’s Jeff Cox: “While investors worry about trade wars, inflation and interest rates, corporate America just keeps on making money. In fact, profits for the first quarter are expected to run at the highest rate in seven years as companies begin to reap the benefits of tax breaks, improving consumer confidence and a growing economy. The projections are eye-popping: a 17.2 percent growth rate in bottom-line profit for the S&P 500 — the best since the first quarter of 2011 — coupled with solid top-line sales gains of 7.2 percent, according to FactSet. More than 50 companies already have revised their guidance upward, a record since FactSet started keeping track in mid-2006.

“That’s all good news. So what’s the downside? The bad news is that this may be as good as it gets, with a strong earnings season only confirming what investors already knew and providing little upside tailwinds for stocks… That’s in part because the market already has gone considerably higher.”

Gold rush. Bloomberg: “Gold bulls are finding 2018 offers plenty of reasons to be cheerful. Bullion’s wrapping up a third quarterly gain, a feat not seen since 2011, and exchange-traded fund holdings are near the highest in a half-decade. Haven demand may also get a boost with foreign-policy hawks in the ascendant in Washington… Gold’s haven qualities have come back in focus this year as… Trump’s administration picks a series of trade fights with friends and foes, and investors fret about equity market wobbles that started on Wall Street and echoed around the world. At the same time, although geopolitical tensions with North Korea may be easing, Trump’s pick of John Bolton as his new national security adviser has spurred speculation of a potentially harder line against Iran.”

Megacap tech shares slumped again Wednesday as pessimism about the sector showed few signs of letting up. The dollar jumped while Treasury yields held below 2.8 percent as data showed American economic growth beat estimates.



GOP eyes balanced budget amendment. The Post’s Jeff Stein: “House Republicans are considering a vote on a ‘balanced-budget amendment,’ a move that would proclaim their desire to eliminate the federal deficit even as they control a Congress that has added more than $1 trillion to it. The plan is expected to have virtually no chance of passing, as it would require votes from Democrats in the Senate and ratification by three-fourths of the states. Republican lawmakers have pushed for the vote as a way to signal to constituents ahead of the midterm elections that they have tried to reduce the nation’s deficit… 

“In December, Republicans slashed the corporate tax rate and temporarily reduced taxes for individuals through the new tax law. The Joint Committee on Taxation, Congress’s official scorekeeper, determined that the law will add more than $1 trillion to the nation’s deficit over the next decade. Earlier this month, Congress also approved a $1.3 trillion omnibus spending bill that increased funding for the military, infrastructure and programs to combat the opioid crisis, among other spending priorities. And Republicans are also considering votes for more tax cuts, which would further drive up the nation’s deficit.”

(Bloomberg put together some nice graphics depicting the deficit’s growth here.)

1 in 10 to face higher tax bills. Bloomberg’s Erik Wasson: “Most Americans will owe less in taxes as a result of [Trump]’s overhaul of the U.S. tax code, but in a few jurisdictions, about one in 10 will be paying more, according to an analysis released Wednesday by the Tax Policy Center. New Jersey topped the list of states with the highest percentage of taxpayers seeing a hike, at 10.2 percent. Maryland and the District of Columbia followed, at 9.4 percent, the report shows. In California, 8.6 percent of taxpayers will pay more and in New York 8.3 percent will have higher levies. North Dakota has the most winners from the new law, with 75.4 percent receiving a tax cut and less than 4 percent seeing an increase.”

Hoenig criticizes bipartisan Senate bank bill. Washington Examiner’s Joseph Lawler: “Federal Deposit Insurance Corporation vice chairman Thomas Hoenig warned against a measure in the Senate-passed bank regulatory relief bill that would lessen capital requirements for big custody banks like State Street and the Bank of New York Mellon. ‘These trusted custodians must remain pillars of strength and should be retaining capital, not reducing it,’ Hoenig said in a speech at the Peterson Institute for International Economics. Although he criticized that and other aspects of the pending bipartisan legislation, he favors it overall because it provides regulatory relief for regional and community banks.”


Lighthizer bullish on NAFTA deal. Reuters’s David Ljunggren: “U.S. Trade Representative Robert Lighthizer on Wednesday expressed optimism that talks to modify NAFTA could be wrapped up quickly, but a top Canadian official was more downbeat, saying much work remained. The United States wants to hasten the slow pace of negotiations on the $1.2 trillion North American Free Trade Agreement, citing a need to finish before a July 1 presidential election in Mexico.

‘I think we are making progress. I think that all three parties want to move forward, we have a short window, because of elections and things beyond our control,’ Lighthizer told CNBC television…But chief Canadian negotiator Steve Verheul told reporters, ‘We’ve got quite a bit of work do yet,’ and noted that Washington had not yet explained what it meant by an agreement in principle.”

U.S. seeks raises for Mexican auto workers. Axios’s Shannon Vavra: “The latest U.S. proposal in NAFTA negotiations with Canada and Mexico includes a provision that would involve higher wages for auto workers in Mexico… This is the latest attempt to resolve a dispute over which cars are subject to tariffs under auto rules of origin, one of the major sticking point in negotiations. Mexico’s negotiators argue that would make North American auto production less competitive and are unlikely to approve it, the sources say. And any proposal that makes it past the negotiators would have to be approved by the Mexican Congress.”

China cuts taxes for Trump-targeted industries. Bloomberg: “China’s high-tech industries are among sectors poised to gain from a fresh round of tax cuts, just as… Trump weighs tariffs to penalize them. The value-added tax on manufacturing will be cut to 16 percent from 17 percent starting May 1 while the rate on transportation, construction, and telecommunications services will be lowered to 10 percent from 11 percent, the State Council said in a statement late Wednesday. The reductions will directly benefit high-end manufacturing and innovation-driven technology companies that are supported by the state’s ‘Made in China 2025 plan.’… The 2025 plan supports information technology, high-end machinery and robotics, aerospace, marine equipment and ships, advanced rail transport, new-energy vehicles, electric power, agricultural machinery, new materials and bio-medical.”


Cook calls for privacy regulation. WSJ’s Tripp Mickle: “Apple Inc. Chief Executive Tim Cook on Wednesday called for privacy regulation, saying consumers should have more visibility into not only what personal information they share online but how companies stitch together that information to better understand their users. Mr. Cook’s remarks come amid an outcry over how technology companies collect and manage the personal data of their users…  ‘We’ve never believed that these detailed profiles of people that have incredibly deep personal information that is patched together from several sources should exist,’ Mr. Cook said during a taping of an MSNBC show slated to air April 6. He said he is generally averse to regulation, ‘however, I think we’re beyond that. It’s time for a set of people to think about what can be done.'”

More Facebook shade from Cook: “To me, it’s creepy when I look at something and all of a sudden it’s chasing me all across the web.” And asked what he’d do if were in Facebook CEO Mark Zuckerberg’s position, Cook said, “I wouldn’t be in this situation.”

Equifax names new CEO. NYT’s Stacy Cowley: “Equifax on Wednesday named Mark Begor, a private equity executive who once led General Electric’s credit card business, as its new chief executive. Mr. Begor, 59, takes over for Paulino do Rego Barros Jr., who has filled the role on an interim basis since September, when Richard F. Smith stepped down after a data breach exposed sensitive personal information, including Social Security numbers, of 148 million people. Mr. Begor, a managing director at the private equity firm Warburg Pincus, will start at Equifax on April 16. He is also a member of the board at the credit-scoring company FICO, a position he plans to give up before joining Equifax. Equifax said it would give Mr. Begor stock and options valued at $17 million this year and an annual salary and bonus of up to $4.5 million.”

AT&T judge: Hurry up. Reuters’s Jessica Toonkel: “U.S. judge Richard Leon on Wednesday warned attorneys for the Department of Justice and AT&T Inc to speed up the trial over the proposed merger of the large telecommunications company and Time Warner Inc, or risk missing the June 21 deadline to complete the deal. Under the agreement, which had been extended from April 22, either company can pull out if the deal announced in October 2016 is not completed by the deadline… Wednesday was the fourth day of the trial in U.S. District Court in Washington, that is due to last six to eight weeks.”



“The Federal Reserve’s leadership is 80 percent male and 87 percent white,” The Post’s Heather Long reports: 



  • The FDIC’s Money Smart for Small Business town hall.
  • The National Economists Club holds an event.
  • The American Enterprise Institute holds an event on “What happened to compassionate conservatism — and can it return?”


From The Post’s Tom Toles: 

And from The Onion: 


President Trump ousts Veterans Affairs Secretary David Shulkin:

White House press secretary Sarah Huckabee Sanders said the White House looks forward to the Russia probe “wrapping up:”

Here’s why a former clown is running for Congress: 

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