"If you could kick the person in the pants responsible for most of your trouble, you wouldn't sit for a month" -- Theodore Roosevelt
Finally, a Pause
It did not seem to be much of a pause, really. The S&P 500, Nasdaq Composite, and the Dow Jones Industrial Average had closed at new highs for five consecutive days. This came on top of a post-election rally that many felt had gone too far, too fast prior to those five sessions. The Dow is nice, but its scope is narrow. The Nasdaq is more tech-centric than the other, so traders are left referring to the S&P 500 when referring to the broad marketplace. The S&P 500 closed down small on Thursday. Going into a three-day weekend, and ahead of a week heavy in retail earnings, markets could become sloppier today.
Buy the Rumor, Sell the News?
I've been asked often by readers over the last few days about when I thought this surge that has brought the S&P 500 from 2270 to the mid-2340s just in the first two weeks of February alone would peter out. The index is up almost 8% since stabilizing after the electoral swoon. What I have been telling folks is that we have had confidence-support earnings, which in turn have supported confidence. You saw the CPI, you saw retail sales. Apparel, for crying out loud!
The new administration's pro-business economic agenda was such a drastic sea change in direction for Washington, that investors went all in. Why wouldn't they? Tax reform, deregulation, repatriation of funds from abroad and increased fiscal spending all sound terrific, at least for the short run. The president himself has been cheerleading all the way, telling folks how "phenomenal" the coming tax plan will be. I hope it is, because it better be. A tax reform bill with thorns such as a border adjustment or a value added tax would make it more like a shell game, and a lot less phenomenal.
That tax plan is the number one item on the laundry list of hopes, and dreams. Not just for corporations, but for the...