The Dow Jones Industrial Average soared to a new all-time high Tuesday, cheered by the new North American Free Trade Agreement (NAFTA). However, the S&P 500 and Nasdaq closed lower, weighed by conflicting trade sentiment.

I’ll explain why optimism over the trade war is unwarranted.

President Trump today continued to tout the revamped NAFTA as a vindication of his blunt negotiating tactics and a victory for the American economy. The new moniker slapped on the agreement is the United States-Mexico-Canada-Agreement or USMCA.

Well, here’s what the fawning financial press isn’t telling you: Trump’s “new” NAFTA largely entails what Canada and Mexico already agreed to in the Trans-Pacific Partnership (TPP) agreement. If you remember, TPP was derided and abandoned last year by the Trump administration for being a “terrible” deal.

Notably, TPP included online commerce and intellectual property safeguards and looser trade protections for Canada’s dairy industry. Those TPP provisions, as well as several others, are now included in the USMCA, largely unchanged.

I hate to be the skunk at the garden party, but it’s my job to read between the headlines and give you the straight facts, even if no one wants to hear them.

The provisions in USMCA beg the question: was it worth wrecking relations with our neighbors and roiling financial markets, to simply rebrand old treaties?

It seems that domestic electoral calculations were more in play here than what was good for the global economy. If catering to Trump’s base was the goal, it’s not working, according to a new public opinion survey taken in the so-called “Rust Belt”:

In fact, USMCA is in some ways worse than the old NAFTA. The most troubling new provision is that the deal sets up a mechanism for automatically reviewing its terms periodically. This should worry corporate leaders and investors, because it adds a huge amount of uncertainty.

The upshot: Don’t make investment decisions based on press conferences, political boasts, or cable news Chyrons. Political theater, whether it’s performed by Republicans or Democrats, is toxic to your portfolio. Stick to the fundamentals of each investment you own.

The SEC gets tough…

Here’s another bit of conventional wisdom that investors should challenge: financial wrongdoing will go unpunished under Trump. Think again.

The Trump administration is considered fiercely pro-business and pro-Wall Street, with a “hands off” attitude toward regulatory enforcement. And of course, those characterizations are true. But let’s examine Elon Musk’s unexpected stint in the public stockade.

Tesla (NSDQ: TSLA) shares today plunged 3.12%, continuing their volatility in the wake of a settlement Saturday between company founder Musk and the Securities and Exchange Commission (SEC). The settlement stemmed from Musk’s tweets in August about taking the electric car marker private.

Under the agreement with the SEC, Musk and the company each will pay a $20 million penalty, and Musk will be barred from serving as chairman for at least three years. The agency retracted its threat to oust him as chief executive officer, which allows Musk to still call the shots at Tesla.

Musk posted a series of tweets in early August suggesting that he would take debt-ridden Tesla private. In the tweets, Musk wrote “funding secured” and “investor support confirmed” for a deal. Tesla shares jumped.

Musk eventually abandoned the plan and TSLA shares tanked. That’s when the SEC stepped in.

Last week the SEC filed charges against Musk related to the take-private tweets, stating: “Musk had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source.”

Musk settled with the SEC on Saturday and ended up accepting penalties that were harsher than those originally proposed by the agency. Advisers persuaded Musk that a drawn-out court battle was in no one’s interest.

The settlement was announced only two days after the charges were filed. In addition to paying the monetary civil penalty, Tesla also must add two independent directors to the company board and Musk must step down as chairman for three years. Musk may be a billionaire, but $20 million is real money and serves as a deterrent to others.

The SEC is signaling to the financial community that it has no intentions of going “soft” on investment abuses. The unexpected filing of charges, and subsequent swift settlement with Musk, should disabuse anyone’s assumption that the anti-regulation fervor of the Trump administration will lead to a toothless SEC.

When Trump appointed Jay Clayton as chair of the SEC, the expectation was that he would coddle Wall Street and investors. Clayton is a veteran corporate lawyer who has indicated that one of his top priorities would be to make capital markets more accessible. But the Musk incident puts Wall Street on notice that the SEC intends to function as a proper watchdog.

Although not widely publicized, the SEC over the past week has announced charges or penalties against eight corporate officials at six companies, in addition to Tesla.

The SEC’s case against Musk also shows that the commission is closely scrutinizing social media platforms. Investors and business leaders need to understand that comments on Twitter are considered tantamount to official public statements.

Always approach social media with caution. Musk learned this the hard way. Also be wary of corporate leaders who heavily rely on Twitter to make important pronouncements. When it comes to gauging the suitability of investments, tweets are poor indicators.

Tuesday Market Wrap

• DJIA: 26,773.94 +122.73 (0.46%)
  
• S&P 500: 2,923.43 -1.16 (0.04%)
  
• Nasdaq: 7,999.55 -37.76 (0.47%)
  

Tuesday’s Big Gainers

• DavidsTea (NSDQ: DTEA) +63.14%

Tea retailer subject of cannabis firm buyout rumors.

• Pyxus International (NYSE: PYX) +14.24%

Tobacco processor gets cannabis cultivation license from Canada.

• Inovio Pharmaceuticals (NSDQ: INO) +14.21%

Biotech posts positive clinical data on cancer drug.

Tuesday’s Big Decliners

• Stitch Fix (NSDQ: SFIX) -35.16%

Online styling service’s earnings disappoint.

• Mesoblast (NSDQ: MESO) -17.79%

Analysts skeptical over prospects of biotech’s new drug.

• Aduro Biotech (NSDQ: ADRO) -13.02%

Biotech’s immunotherapy presentation underwhelms.

Letters to the Editor

“Will rising oil prices push people toward solar?” — Harold G.

Call it the “Great De-Coupling.” The solar industry is less susceptible to the rise and fall of crude oil prices, because it now moves along its own supply-and-demand dynamics. Solar boasts a well-developed infrastructure, greater efficiencies, moneymaking companies, and a growing customer base.

Questions about energy investing? Drop me a line: mailbag@investingdaily.com

John Persinos is the managing editor of Investing Daily.