For some, this week represented a difficult choice. "Do I stay loyal to what got us here," he asks, reflecting upon the last few months while gazing upon his own reflection, red cap pulled down tight upon his head, its crown crammed with the bold white letters of a winning campaign slogan. "Or do I commemorate this historic moment" he silently inquires of himself, switching to the just-as-fashion-backward DOW 20,000 baseball hat, both more likely conversation pieces than celebratory trophies not all that long ago. For others, it was a time of study; picking apart the earnings reports that came in droves, on balance showing strengthening fundamentals, greater optimism about the future than in years past, supportive of a 17 multiple on the S & P but not indiscriminately so, which is in itself supportive of further upside. Materials have been the leading sector in the S & P over the last year, YTD, month and five-day periods (through Thursday). But we saw choices being made. The steel short I put on, noted in last week's letter, worked out well, although I worried about AK Steel when it reported a solid quarter. Not one to get greedy, I covered U.S. Steel early in the week and AKS early Thursday, knowing full well that rational thought can be fleeting (for the record, I am speaking about the rational thought that allowed those stocks to decline, not my window of lucidity that drove me to cover). Alcoa reported a monster quarter as well but that didn't stop the sellers. The point is that there is finally divergence in the market — and that's a good thing. And then there is Caterpillar , the Cleveland Browns of the NYSE, who have a near-perfect record of something like 0-for-forever in meeting their own quarterly guidance. Sometimes it seems to me that its shareholders suffer from Stockholm syndrome because the stock just goes up. And then there is the president. He certainly did hit the ground running, firing off executive orders that fulfilled his campaign promises and reiterating his vow to fulfill others. The market just doesn't seem to care — or maybe it does because midweek, after the bulk of the signings took place, and after the market weighed the consequences, it voted for red cap. Simplistic? Facetious? Sure, but isn't that the story? Not a criticism, an observation. Not being political, but rather analytical. President Trump , (this may take longer to become accustom to saying than "my wife" when I first got married) has changed the dialogue. You can sit there, complain and opine on what can go wrong, on how he is destroying our relationship with every country, etc., and miss out on the new high list everyday, or go along for the ride to the upside while taking advantage of cheap insurance to hedge out your risk as the VIX continues to make new lows on a daily basis. The big leap of faith there of course is assuming volatility, the VIX, is as effective as it was. Only time will tell. So much is new and so many of the old rules don't apply, if they ever did. Some wonder why Trump's behavior, the less rational side such as the voter fraud investigation, the obsession with crowd size, etc., hasn't cast more of a pall — any pall — on the markets. Well, maybe it didn't seem like it but the there was a four-week run where the S & P treaded water despite improving economic data, a dearth of negative pre-announcements and positive bank earnings. Others fret as to the consequences of protectionism and angering countries that have been allies such as Mexico and Canada or those that can retaliate such as China. Still others, those who, in my opinion have it right, just go about their business, possibly of two minds, saying what they will about what they want but putting their money to work, perhaps shorting sovereigns against the backdrop of an improving global economy and judiciously buying equities in the U.S. where value can be found or momentum can continue. Here's that simplistic answer. Protectionism is no more than the rallying cry of the recently deposed or of academics still angry at Smoot and Hawley, attributing their protectionist policies for deepening an already treacherous depression. For others, those of us who have been in the business for more than 20 years, perhaps 30 years, our trade war reference is about bananas. True it was ugly; it was long — lasted six years and nearly rose to the level of swordplay with our EU allies before being settled amicably near the turn of the century. I remember it vividly, the scars yet to heal, believing that my oatmeal would forever be lonely. George Santayana was right, it was a repeat of history since Smoot-Hawley's stab at protectionism also involved produce (but eggs were the central issue). "Oh, the travesty of it all!" And as far as Trump's shot at China, they are hardly a target worthy of sympathy: human rights abusers, communists that control the number of children, free speech, etc. And as to the other stuff, the wall and all, well, OK you got me there but isn't he just negotiating? Read the damn book. So facetious, of course. Simplistic? Damn right. And that is the point. It is all about the Benjamins. While the market is moving in the right direction, consolidating under 20,000 and then breaking upward; while earnings and the economy are ratcheting higher; while CEOs are bending to the president's will; and while he wields an active pen above the parchment on which his executive orders are scribed; as Paul Ryan and Mitch McConnell maintain the party line and keep the party in line, all is interpreted as a negotiation, the tactics of a self-made billionaire given wide latitude until proven wrong, acting as a CEO. I have become a bit more constructive on the market perhaps still sitting with too much cash. If only the president could refrain from the tweets and the ego-driven, thin-skinned commentary, his approval rating — after a sufficient cure period — may actually increase and that nagging feeling may go away. But, in truth, that's not what is keeping my cash levels high. I'm also a bit more bullish on complacency. There have to be bumps along the way. Even a more conciliatory personality experiences pushback, how can Trump not? The answer is that perhaps Ryan is the real puppet master as well as McConnell. The Republicans have a real chance of staying around a long time as the Democrats continue to come off as everything they accuse the other side of being: angry, in disarray and intolerant of differing views. But still, it takes time to enact legislation and markets are not know for patience, not at these levels and not with vol hugging a 10 handle, assuming that means anything at all which maybe it doesn't. Meanwhile, Trump gets the credit and everyone makes money. I added to the financials — Citi sold off 10 percent and I like buying on sale. Financials, not all, but under book, look good to me as the Fed lurks — I still believe three hikes this year and that Draghi will have to disengage from QE sooner than he has let on. So for now, as we move midway into earnings season and the wall of worry overshadows the Mexican wall, we probably have more upside, although a pullback of 3-5 percent is always there in every market. (Mr. Weiss is the managing partner of Short Hills Capital Partners, a hedge fund advisory firm and asset manager primarily established to invest on behalf of one of the industry's most successful hedge fund managers. He has held senior management positions at SAC Capital, Salomon Brothers, Lehman Brothers and MSW Asset Management. He is the author of two investment books and a novel, is a visiting teaching fellow at UNC's graduate business school, Kenan-Flagler, and a CNBC contributor appearing regularly on "The Halftime Report.")
