Tag: finance

Apple Sues Qualcomm For $1 Billion

It has gone from bad to worse for mobile chipmaker Qualcom, which just days after getting sued by the US government, which accused the chipmaker of engaging in monopoly tactics over mobile phone components, was also sued this afternoon by the world’s biggest company. Apple filed a $1 billion lawsuit against its supplier, accusing Qualcomm of overcharging for its chips and refusing to pay some $1 billion in promised rebates for chip purchases. Apple said in its complaint that Qualcomm demanded onerous terms for its technology and that it withheld rebates because Apple cooperated with South Korea’s antitrust regulator, the Korea Fair Trade Commission, in its probe into Qualcomm licensing practice.

The KFTC fined Qualcomm Inc 1.03 trillion won ($854 million) in December for what it called unfair practices in patent licensing, a decision the U.S. chipmaker said it will challenge in court.

In its statement, Apple said that Qualcomm has taken “radical steps,” including “withholding nearly $1 billion in payments from Apple as retaliation for responding truthfully to law enforcement agencies investigating them.”

Apple added, “Despite being just one of over a dozen companies who contributed to basic cellular standards, Qualcomm insists on charging Apple at least five times more in payments than all the other cellular patent licensors we have agreements with combined.”

“If that were not enough, Qualcomm then attempted to extort Apple into changing its responses and providing false information to the KFTC in exchange for Qualcomm’s release of those payments to Apple. Apple refused,” Apple also said.

According to the Apple complaint, Qualcomm’s terms required Apple to pay a percentage of the average selling price of an iPhone to use Qualcomm patents and to exclusively use Qualcomm chips in iPhones from at least 2011 to 2016. Apple received what it called quarterly rebates from Qualcomm under terms of the agreement, but Qualcomm began withholding those last year after Apple met with Korean regulators, the suit says.

The lawsuit is surprising in that Qualcomm is a major supplier to both Apple and its arch nemesis, Samsung Electronics for “modem” chips that help phones connect to wireless networks. The two companies together accounted for 40% of Qualcomm’s $23.5 billion in revenue in its most recent fiscal year. Furthermore, Qualcomm was the sole supplier of modem chips for Apple’s phones until the release of the iPhone 7 in September. Intel Corp supplied about half of the modem chips for the newest models, said Stacy Rasgon, a senior analyst at Bernstein Research.

Apple made the move around the same time that Samsung, which had switched to using its own internal chips for its Galaxy S6 phones, returned to Qualcomm for the Galaxy S7.

Meanwhile, Qualcomm’s legal problems continue to pile up. In February 2015, the company paid a $975 million fine in China following a 14-month probe, while the European Union in December 2015 accused it of abusing its market power to thwart rivals. In Washington on Tuesday, the U.S. Federal Trade Commission filed a lawsuit against Qualcomm, saying the San Diego-based company used its dominant position as a supplier of certain phone chips to impose “onerous” supply and licensing terms on cellphone manufacturers like Apple and to weaken competitors.

For now, Qualcomm “has been able to manage through (the Apple contract loss) pretty well because they got back Samsung at the same time,” Rasgon said, however sensing weakness how long until Samsung likewise attacks its key vendor demanding easier terms too? Judging by the modest reaction in QCOM’s stock, the market does not see that as a likely possibility.

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Morgan Stanley CEO James Gorman 2016 Pay: $22,500,000

With all eyes focused on Washington, on a Friday evening, Morgan Stanley just revealed that 58-year-old Morgan Stanley CEO James "don't call me Jim" Gorman was paid $22.5 million. Despite a notable drop in earnings from expectations and a focus on cost-cutting, Gorman got a 7.1% pay rise (almost double that of Jamie Dimon).

Analysts expected Morgan Stanley to earn $3.155 in 2016. By the end of 2016 the firm realized just $2.756… but thanks to Trump's election victory, the stock soared…

As Bloomberg notes, Gorman received $1.5 million in salary as well as restricted stock units, Mark Lake, a company spokesman, said Friday. The restricted stock is valued at about $5 million based on Wednesday’s closing price. The New York-based firm will report other components of Gorman’s pay package in coming months.

Gorman’s pay for 2015 was $21 million, down 6.7 percent from the prior year. He typically receives at least half of his compensation in the form of restricted shares. Some vest over time depending on the bank’s return on equity and stock performance relative to the S&P Financials Index, while the remainder vests over three years regardless of financial results. Part of his cash payouts also have been deferred over three years.

The CEO in November made his first sale of Morgan Stanley stock since he joined the bank in 2006. He sold shares and exercised stock options for a net gain of about $10 million, regulatory filings show.

 

Gorman's pay raise comes as the firm has shifted its focus toward wealth management with a $1 billion expense-reduction program, improving the wealth unit's profit margin and increasing shareholder capital return are key in its effort to improve return on equity.

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The Following Words Had Never Appeared In An Inaugural Address, Until Today

That Trump’s inaugural address was provocative is putting it mildly. Nowhere was this more obvious than in the initial reaction of the Financial Times. Consider the following excerpt:

For most presidents, a first inaugural address has been the occasion to set out a personal vision of the American idea. You do not necessarily lose points for failing to set out policy in granular detail. You are playing mood-music, making it as stirring as possible and positioning yourself in the grand flow of American history: reminding your audience of an essential continuity. Mr Trump’s theme was the opposite. From his first words, he stressed discontinuity: that his presidency would be a break.

 

“Today’s ceremony, however, has a very special meaning because today we are not merely transferring power from one administration to another or from one party to another, but we are transferring power from Washington DC, and giving it back to you, the people.”

 

That audience-shaping attempt, at least, had the right idea. Mr Trump made a lot of play with the second and first-persons plural: “This is your day”; “We will bring back our jobs.” But he positioned his “great movement” in a way that suggested not that the Washington government was the expression of democracy but its enemy. It was an unusually rancorous, backward look, given what he said about unity and solidarity. It was a dismissal of, rather than a humble doffing of the cap to, history.

 

[R]ewarmed like a tray of unappetising leftovers, were the familiar slogans of the campaigning Mr Trump. “The forgotten men and women of our country will be forgotten no longer.” “America will start winning again, winning like never before.” “All talk and no action.” “America first, America first.” They were greeted with what, at least on the television relays, sounded like distinctly halfhearted applause.

 

And here — during his sporadic attempts at the high style — were some awkwardly half-formed figures of speech. To say “we stand at the birth of a new millennium” sounds grand but, unless you have a 1,000-year regime in mind, if you can say that in 2017 you can say it any time you like. “We are one nation and their pain is our pain” would have worked if “they” had been specified. It wasn’t.

 

He spoke of “rusted-out factories scattered like tombstones across the landscape of our nation”; of how “a new national pride will stir ourselves (sic), lift our sights and heal our divisions”; of how “a new vision will govern”; of how “we will shine for everyone to follow”; of how “the wealth, strength and confidence of our country has dissipated over the horizon”. Each of those phrases is intended to resonate — but each, like a bell cast with a fault, makes a slight clunk.

And the punchline:

The speech’s most memorable phrase was “American carnage”. As well as being, unfortunately, the title of a thrash metal tour a few years back, it is memorable because it sounds slightly wrong. You want an audience to associate pride, dreams, prosperity, unity, freedom, hope and suchlike with the word “American” — not “carnage”.

Etc.

While we won’t comment on the FT’s visceral reaction to the speech (full transcript here) – clearly the establishment mouthpiece was not happy with the words that came out of Trump’s mouth – and while readers can make up their own mind about Trump’s address, we do want to point something out.

Like everything else about him, Trump’s speech was indeed a break from established tradition, and nowhere was this more obvious than in the selection of words that had never appeared previously in any US inaugural address.  Some of them: bleed, carnage, depletion, disrepair, flush, Islamic, ripped, sad, rusted, sprawl, stealing, stolen, subsidized, tombstones, trapped, trillions, unstoppable.

The full list is below.

Indeed, the speech was so unorthodox it even stunned Trump advisor Carl Icahn. As he told CNBC, “Donald surprised me coming on so strongly about the establishment. I admire him for doing that.” 

“I admire him for not just trying to say, ‘Wow. Let’s smooth it over. Let’s be buddies.’ I mean, he came on extremely strongly and he’s giving you a look at what the future, I think, is going to be,” Icahn added.

Icahn, Trump’s special advisor on regulatory reform, said he expects the 45th president of the United States to take a confrontational approach, to some extent. Yet he argued that may be a good thing because it will promote change.

“I think you have to break up this establishment. You have to stop the perception which we have in this country that the government is at war with business, that the government doesn’t like business and that’s what you’ve had for eight years with Obama,” Icahn said.

We have yet to see if Trump will indeed follow up with his promises, or his belligerent speech. We do have one last question, however: did Trump really “borrow” a part of his address from… Bane?

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Summing Up 8 Years Of Barack Obama

Submitted by Simon Black via SovereignMan.com,

It’s hard to argue with Barack Obama’s jump shot. I can’t imagine Rutherford B. Hayes having that kind of game.

Or his swagger. Comedic timing. Even charisma.

And there have been plenty of times over the last eight years when, in all seriousness, those qualities have truly mattered.

I can’t imagine anyone not getting goose bumps when President Obama sang Amazing Grace during the eulogy of Reverend Clementa Pinckney in 2015 after the horrific church shooting in Charleston.

During his presidency he had thrust upon him the impossible task of consoling an entire nation over and over again. Personality truly mattered.

But tangible, productive results are an entirely different story, and that’s what I want to examine today.

I’ve read a number of articles this week which glowingly praise President Obama’s accomplishments. Others offer scathing critiques.

Most tend to focus on the Affordable Care Act (ACA), i.e. Obamacare, suggesting that reforming healthcare is one of his most important legacies.

Maybe so.

There are undoubtedly millions of people who now have medical insurance that never had insurance before.

And that is certainly a noble accomplishment.

The problem is that focusing on this single metric is a terrible premise.

Millions of people are no longer uninsured. Check. But that’s where their thinking stops.

What’s the overall quality in the system? What’s the cost?

Those metrics are conveniently overlooked.

Not even two months ago, the Obama administration was forced to publicly acknowledge that healthcare premiums will rise by an average of 25% in just a single year under Obamacare.

Plus, many consumers will only have a single option to choose from as a number of major insurance companies scale back insurance policies they offer.

The administration also admitted last year that overall healthcare spending continues to rise, surpassing $10,000 per person for the first time ever.

Then there’s a question of quality and efficiency.

In 2016, a Johns Hopkins study concluded that the number of preventable medical errors has soared in recent years and is now the third leading cause of death in the United States.

Obviously no one can blame Barack Obama for this trend.

But that’s precisely the point: it’s impossible for any program to be successful when the way you define success is so fundamentally flawed.

Obamacare focuses on one thing: coverage. Are more people insured? Yes. And in their mind, that makes it successful.

But anyone who looks at the big picture will reach an entirely different conclusion.

Premiums rose. Overall spending increased. Quality didn’t improve. Americans aren’t getting healthier.

(Not to mention the matter of that $2 billion website…)

However noble the intentions, it’s hard to consider these results a major success worthy of an enduring legacy.

Then there’s the issue of jobs. President Obama has been credited with ‘creating’ more than 11.3 million jobs.

This entire premise, of course, is total nonsense.

It’s not like the President starts businesses and hires people. The only jobs the President creates are in government.

It’s the private sector that create jobs.

And for a guy who once told entrepreneurs, “you didn’t build that,” (referring to their businesses), he sure is quick to take credit for 11.3 million jobs created.

But OK, let’s play along and give him credit: creating 11.3 million jobs is a very noble accomplishment.

Once again, however, this metric for success is flawed.

What’s the quality of those jobs? At what cost?

Total “goods-producing” jobs, i.e. workers who make stuff, actually declined under the Obama presidency.

Manufacturing jobs, construction jobs… even utilities and media jobs… all fell over the last eight years.

Bear in mind that the US was already at the peak of recession when President Obama took office, with unemployment surging.

Yet today, goods-producing jobs are even below those dismal figures from 2009.

So what jobs were created?

A good chunk of them are in healthcare, which sort of highlights the earlier point that Americans aren’t getting healthier since they need even more workers to care for them.

Additionally there were a lot of jobs created in the federal government.

Plus a full 2 million of those new jobs have been waiters and bartenders.

I’m serious.

At the beginning of the Obama presidency in 2009, there were 9.5 million waiters and bartenders in the United States.

Today there’s 11.5 million waiters and bartenders.

So it’s not like all these millions of workers who supposedly owe their jobs to President Obama are out there discovering the cure for cancer.

Then you have to look at cost.

Despite these 11.3 million new jobs, the number of food stamp recipients in the Land of the Free Lunch increased by 13.9 million during the Obama administration.

Plus, during his 8-years in office, the Obama administration spent a record $28.7 TRILLION and registered a $10 trillion increase in the national debt.

This means that every job President Obama supposedly created cost the American taxpayer $885,000 in debt. Per job.

This is a pretty pitiful return on investment.

And that’s really the bottom line. Debt lasts.

One day his Supreme Court justices will retire. Obamacare may be repealed. History will forget about his charisma and charm.

Edward Snowden may eventually return home. The 500,000+ pages of regulations his administration issued will be replaced.

And even the families of all the innocent victims who were accidentally killed in his drone strikes may move on with their lives.

But the debt will still be there.

Consider this: in the last two weeks alone, the Treasury Department has auctioned off tens of billions of dollars worth of debt in the form of 30-year bonds.

This means that a child who won’t even be born until 2030 will have some high school summer job in late 2046, and an increasing chunk of his income will be taxed to pay off the debt that Treasury Department borrowed a few days ago.

That’s a legacy which outlasts everything else.

Do you have a Plan B?

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Brazilians Stunned By Death Of Supreme Court Justice Ahead Of “Explosive Testimony”

The death of Brazilian Supreme Court Justice Teori Zavascki who had presided over the sprawling “Carwash” corruption scandal, and who died yesterday in a freak airplane crash has sent shockwaves both around the globe and in Brazil, because while few in polite company will discuss it, it has opened the possibility of political assassinations as a means of “quieting” legal proceedings.

And as Reuters reports today, while the death of the judge will likely not derail the country’s biggest ever graft probe, it will delay it, “handing valuable breathing space to President Michel Temer” who many have accused of being even more corrupt than his predecessor.

While there is no evidence yet of “foul play”, the timing of the death is oddly coincidental, especially since the upcoming revelations could have had damaging implications for Brazil’s still relatively new president Temer.

As a reminder, Justice Zavascki was killed in a plane crash on Thursday, “just weeks before he was due to unveil explosive testimony from executives at engineering group Odebrecht SA that is expected to implicate as many as 200 politicians in a vast kickback scandal” Reuters notes.

While the Police are investigating the crash in which a small, twin-prop plane that was carrying him plunged into the sea south of Rio de Janeiro during heavy rain, it is unlikely that they will find anything damaging.

And now, thanks to the tragic delay, postponing the fallout from evidence that could incriminate powerful political figures in Temer’s coalition, and perhaps Temer himself, gives the president more time to push through reforms to generous pension and labor rules and restore business confidence in a country stuck in a two-year recession.

Temer has already lost four cabinet members to corruption allegations. Several other ministers and leaders of his PMDB party in Congress have been named in Odebrecht plea deals, raising concern about the survival of his government. 

“This can give Temer more room to move ahead with his reform agenda in Congress but Zavascki’s death won’t stall or change the course of the investigations,” said Thiago de Aragao quoted by Reuters, partner at ARKO consultancy that advises corporations and banks on investment in Brazil. “It will just pause it for a while.” Temer, who has himself been named by one defendant as a recipient of illegal campaign funds, has said he will rapidly appoint a new justice who, under Supreme Court rules, would take over Zavascki’s cases.

“In the short-run, any delay works in Temer’s favor because it will put off the instability that the new accusations will bring,” said Roberto Dias, a constitutional law professor at the FGV think tank in Sao Paulo. “But it’s bad for Brazil.”

And since Temer will likely try to float a judge “friendly” to his cause, it will be up to the Brazilian Senate to confirm him. That process, however, will weeks if not months after Congress returns from its Christmas recess in February. The new judge would then need to get up to speed on the sprawling corruption investigation, dubbed Operation Car Wash, which is centered on bribes and political kickbacks from state-run companies, principally oil company Petróleo Brasileiro S.A., commonly known as Petrobras.

“Zavascki was ready to resolve Car Wash promptly and take decisions that would clear up who could stay in government or Congress and who had to go,” said Ives Gandra Martins, a constitutional lawyer in Sao Paulo.

And, as Reuters adds, those decisions will be delayed until at least March or April, Martins said, preventing Brazil from turning the page on a corruption probe so massive and complex it paralyzed public sector construction projects and deepened the recession.

That, however, is too long for some Brazilians who want to know which of their leaders were embroiled in the scandal that involved at least 6.4 billion reais ($2 billion) in bribes for contracts with state-run enterprises. More details:

In Brazil, federal politicians and other senior officials can only be tried by the Supreme Court. Given the public’s suspicion of politicians, the Supreme Court should opt for a rule that in urgent cases lets it name a replacement from its ranks, rather than wait for Temer’s nominee, said left-leaning Senator Cristovam Buarque.

 

“Any presidential choice would be questionable,” Buarque said in a telephone interview. “It has got to be quick. Brazil cannot wait another six months. We want to know what happened and who should be punished.”

Resistance to Temer subverting the judicial process is rising and at least one justice on the 11-seat court, Marco Aurelio Mello, has come out publicly in favor of one of his peers immediately taking charge of Car Wash. Though he was appointed by impeached former President Dilma Rousseff, the 68-year-old Zavascki had gained a reputation as independent and willing to target corrupt politicians of any stripe, including Rousseff’s Workers Party.

“In the short-run, any delay works in Temer’s favor because it will put off the instability that the new accusations will bring,” said Roberto Dias, a constitutional law professor at the FGV think tank in Sao Paulo. “But it’s bad for Brazil.”

Meanwhile, as Reuters concludes, “for Brazilians dismayed by the scandals that Car Wash has uncovered, Zavascki’s death – whether an accident or not – was just the latest reason to lose faith in their institutions. ”

“His death will delay the Odebrecht testimony and, depending on who takes over, the Car Wash investigation could take a different course,” said Rio de Janeiro systems analyst Bruno Bokel. “I do not believe in our justice system.”

And with yet another country’s population “losing faith” in its political institutions, Brazil is now ripe to be the next nation where an “anti establishment” candidate sweeps control from the status quo and changes the course of local history in the process

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“Is This Thing Still On?” Obama Returns To Personal Twitter

Shortly after handing over the official POTUS Twitter account to Trump, who for now appears more interested in using his existing, personal account for his tweetstorms, creating headaches for trading algos which will have to monitor not one but two presidential accounts going forward, on Friday afternoon Barack Obama officially marked his transition from president back to private citizen on social media, tweeting from his personal @BarackObama Twitter account.

“Hi everybody! Back to the original handle. Is this thing still on? Michelle and I are off on a quick vacation, then we’ll get back to work,” Obama said in his tweet. He also tweeted information about the Obama Foundation, which he plans to launch in Chicago and run during his post-presidential life.

Even back in the private sector, Obama’s reach on Twitter will remain nearly 4 times greater than that of Trump, with 80.9 million followers, compared to the 21 million followers for Trump. Then again, Obama does have a substantial head start.

Meanwhile, Barack Obama’s longtime White House photographer Pete Souza posted his final photo of the departing president Friday, showing Obama leaving the White House for the last time. The one-word caption for the post reads: “farewell.”

 

Farewell.

A photo posted by Pete Souza (@petesouza) on Jan 20, 2017 at 12:06pm PST

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Weekend Reading: Trump – The Best (Or Worst) Of Times

Submitted by Lance Roberts via RealInvestmentAdvice.com,

Today is the day.

It’s inauguration day for Donald Trump as the 45th President of the United States.

For half of you – it is the beginning of an economic resurgence last seen during the Reagan administration. It is the “best of times.”

For the other half – it is the beginning of the “dark ages.” 

So goes politics. But politics and investing are poor bedfellows.

As investors, it is in our best interest that Trump is successful in his plans to “Make America Great Again.” After all, if you have been enjoying the rally that began in November, that lift has come specifically based on expectations of lower taxes, fewer regulations and increased infrastructure spending.

But this is also the day “it gets real.”

While the markets have lifted on “expectations,” the market will now start to focus on actual “actions.”  Of course, what was talked about during “campaign mode” and what actually comes to fruition are always two very different things. This is not only because proposals and promises will be met by stiff opposition from the opposite side of the aisle, but push-back will come from Trump’s own party as well.

Increases in the national debt, the deficit and reforms to health care, taxes, immigration and social welfare programs are not going to be easy negotiations. In many cases, the promises made will never come to fruition, and in others, the end result could be very different than currently envisioned.

Then there are simply the headwinds that currently face the economy from demographics to structural issues as well as the age of the current economic cycle. Economics and political policies don’t exist in a vacuum. While Trump has many ideas to promote growth in the economy, the debt, tighter monetary policies, and budget constraints will provide some offsets.

While there are many hopes from Wall Street, economists and analysts the current bull market is only in the midst of a long-term run higher, there are many conditions which currently suggest caution; particularly if you are close to retirement.

I can only surmise how this eventually turns out.

In the meantime, here is what I am reading this weekend.

Trump

Markets / Fed

Interesting Reads

““In this present crisis, government is not the solution to our problem; government is the problem.” – Ronald Reagan, First Inaugural Address, Jan. 20, 1981

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Gold Pops; Banks, Bonds, & Greenback Drop As Trump Takes Office

Quite a week… this seemed appropriate…

 

Gold remains 2017's big winner with bonds and stocks close to unch…

 

Trump's actual swearing in (and speech) sparked a notable drop in stocks and pop in VIX…But in a desperat attempt to keep The Dow green, VIX was monkey-hammered

 

But VIX ended the week higher…

 

On the week, Nasdaq and Trannies desperately tried to get back to green but Dow, S&P and Small Caps lost ground (Russell 2000's worst week in the last 7)…

 

The Dow managed to get back into the green for 2017

 

US Financials suffered their worst week since September 9th 2016… (Goldman Sachs' worst week since April 2016)

 

Treasuries had their worst week in six weeks…(notably 2Y ended the week best – unch)

 

The USD Index fell for the 4th consecutive week (longest losing streak since Feb 2016)..

 

The Loonie was the worst on the week and cable best…

 

The Mexican Peso was lower on the week again (6th week on a row) but ripped higher today by the most since the election!!

 

And as The Dollar slides, so Gold is up 4 weeks in a row (longest win streak since July)…

 

Crude managed to scramble back to unchanged on the week…

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The Audacity of Trump: Can He Succeed In Spite Of An Establishment That Wants Him To Fail

Submitted via the Opinion Section of the Wall Street Journal

Donald J. Trump takes the oath of office on Friday facing unprecedented opposition but also an extraordinary opportunity. He confronts the paradox of a country skeptical that he has the personal traits for the Presidency but still hopeful he can fulfill his promise to shake up a government that is increasingly powerful even as it fails to work.

In this respect he is the opposite of President Obama, whom Americans admire personally but see as a failure in delivering on his promises. Mr. Trump begins his Presidency without a reservoir of personal goodwill, so more than most Commanders in Chief he will have to win over Americans with results.

***

He will have to do this, moreover, against a political opposition that is blunt and relentless in wanting him to fail. Inaugurations are typically moments of political unity and appeals to larger national purpose, but Mr. Trump will get no honeymoon.

Democratic leaders are calling his election illegitimate, and most of the media wants Mr. Trump to implode—for reasons of partisanship, ideology or simply to vindicate their view during the campaign that he couldn’t and shouldn’t win. No President since Nixon will face a more hostile resistance in the press and permanent bureaucracy.

Yet rather than rage against this hostility, Mr. Trump should view it as an opportunity. So many elites expect him to fail that even small early successes will confound them. So many on the left are predicting the rise of fascism that he can make them look foolish by working well with Congress. So many in the media will portray him as the leader of a gang of billionaires that he can turn the tables with an up-from-poverty and education choice campaign.

Mr. Trump owes his narrow election victory to center-right and independent voters who decided he was a risk worth taking. Notably, they seem to be reserving judgment. In the new Wall Street Journal/NBC News poll, Mr. Trump’s personal popularity rating is 10 points underwater, 38% positive, 48% negative—the lowest of any modern President at inauguration.

But as notably, the public is better disposed to Mr. Trump’s agenda than to his character and temperament. Tax reform, a faster campaign against Islamic State, improving roads and bridges, and fixing health care enjoy widespread support. If voters are ambivalent about Mr. Trump personally, he has a policy opening to earn their support.

Trump

***

Mr. Trump’s main—and essential—mandate is to raise middle-class incomes that have stagnated in the Obama era by lifting the economy out of its 1%-2% growth rut. The White House should scrub every policy choice, first and foremost, against its impact on growth. Mr. Obama put his social and political preoccupations above growth, and the country and his Presidency suffered for it. The opening for Mr. Trump is that by removing Mr. Obama’s barriers to growth, he can unleash the business investment that has been so weak in this expansion.

If Mr. Trump eases the burden of regulation, reforms the tax code, unlocks U.S. energy production and returns markets to health insurance, then capital will get off the sidelines and animal spirits will revive to create new ventures and make pent-up deals. His impulses to restrict trade will have to be contained enough that they don’t undermine his pro-growth agenda. A Trump growth revival is the best way to persuade the skeptical.

The new President will also have to reform a government that too few Americans trust, not least because of its indiscriminate intrusion into ever more of American life. This means fixing public services that people can see, such as an Internal Revenue Service that answers taxpayer questions, a veterans service that doesn’t kill veterans, and health insurance with more choices and lower premiums.

We disagree with Mr. Trump’s immigration priorities, but one reason border politics are so dyspeptic is that illegal immigration contributes to a sense of lawlessness and disorder. Meanwhile, speeding up permitting for new public projects should also be a high priority. As with Wollman Rink in New York City, the President’s business drive could make more of government work again.

Mr. Trump needs partners in Washington who can move his agenda, and he should recognize that Republicans in Congress are a source of expertise and counsel. If he uses them as allies and forms common cause, he can make his first two years the most significant since Reagan’s first term. If he goes to war with them for reasons of pique, or over marginal policy differences, Democrats will be eager to inherit the wreckage—and drive him out of office after four years, if not earlier.

***

The biggest wild card of this Presidency is foreign affairs, where Mr. Trump has instincts but no experience and his penchant for impulsive comments can be unnerving. Mr. Obama worried U.S. friends because he was intent on courting adversaries at their expense. Mr. Trump needs to reassure allies who fear that his “America first” slogan is merely different political cover for a similar U.S. retreat. At least his defense buildup will impress friends and foes, assuming he doesn’t abandon it for budget reasons.

Foreign policy is where his shoot-from-the-lip tendencies create the most trouble. His slap this week at German Chancellor Angela Merkel is the kind of comment that rankles without purpose. If Mr. Trump pursues his own “reset” with Russia without Europe on board, he’ll achieve Vladimir Putin’s goal of dividing the U.S. from Germany and never get the NATO spending increases Mr. Trump wants.

He should also ease up on Mexico, lest his trade bullying push that neighbor to the anti-American left and end decades of economic progress. If he thinks illegal immigration is a problem now, wait until the election of a left-wing Mexican populist.

***

Mr. Trump promised to disrupt the status quo, and to succeed he will have to. How he goes about it will be an adventure—not least in a White House that appears to have at least six major power centers. Management by “chaos” can be messy. Then again, Mr. Trump’s cabinet choices are better than those of the last two Presidents, and in some cases (James Mattis) they are inspired.

The Never Trump opposition will be fierce, but the public will await the results. President Trump’s success will depend above all on delivering on his promises of prosperity at home and greater respect for America abroad.

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