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Tax Plan Finally Released

The House’s tax plan was rolled out this morning after nearly a year in the making. You’d think the market would have a more energetic response given how long it's had to wait for it. However, everyone knows this is just an opening salvo on the tax debate, and that the final form could look much different. The market isn’t even sure something can get passed...though it is hopeful.

All in all, today’s rollout was a big first step toward getting some important legislation passed. In other news, President Trump officially picked Jerome Powell as the next Fed Chair. 

Stocks finished the session right around breakeven...except for the good old Dow. The index dipped in the morning with everyone else, but ultimately spent most of Thursday’s session in the green and ended with a 0.35% advance to another new record of 23,516.3. The S&P spent almost the entire day in negative territory before a late-day surge allowed for a 0.02% increase to 2579.9. The NASDAQ was just the opposite, spending the whole day in the red and finishing with a 0.02% decline to 6714.9. 

This busy week will not let up on Friday, as we’ll get this month’s Employment Situation Report. You’ll recall that last month’s report marked the first decline in 7 years, which was blamed on Hurricanes Harvey and Irma.

Also, Apple announced strong fiscal fourth-quarter results after the bell today, including positive earnings and revenue surprises along with an encouraging outlook for the fiscal first quarter. This comes a day before the new iPhone X is released. Shares of AAPL are up 2.4% after hours (as of this writing). Let’s hope that Apple's successful performance and (fingers crossed) a solid jobs report can lift the market to an 8th week of gains. 

The only buy in the portfolios on Thursday was from Technology Innovators, which added a company that Brian Bolan believes could double from its current price. Read about it below, along with analysis from other editors on today’s tax plan rollout.

Today's Portfolio Highlights: 

Technology Innovators: Last night, Electro Scientific (ESIO) released a quarterly report that Brian Bolan called “earth-shattering”. The lasers systems & components company easily eclipsed earnings and revenue expectations, but the editor was most impressed with the 48 cents to 60 cents guidance for next quarter. The consensus was only at 2 cents! “Basically, the next quarter is going to be better than this quarter, and this quarter was awesome,” he said. Shares soared nearly 30% today, but Brian believes this approximately $21 is on its way to $30. In fact, he thinks it could easily double. Read a lot more about this new addition in the full write-up. 

Large-Cap Trader: "What do I think of the tentative tax plan? 

"It’s not as dramatic as I thought it would be. I still need to see the detailed CBO macroeconomic assessment that will be forthcoming --hopefully before it is made into law-- to review its effect on the deficit and accumulating debt. I am a deficit and debt hawk. 

"Much like the Health Care bill before it, this tax bill is starting in the House. The U.S. usually reserves ‘the real bill’ for the Senate. In light of that, I wouldn’t bank on this version -- coming solely from the House. 

"However, there are elements that are not offensive to me, and I get. The housing deduction at $500K makes some sense to me. The 20% cut to corporate taxes, with respect to the effective rate of tax is not too great. 

"The average S&P500 company currently pays 24.17% in taxes." -- John Blank

Surprise Trader: "The Cliff’s Notes (for the tax plan): Millennials and middle-class give up popular deductions for lower tax rates and a higher standard deduction. Overall, I think this is very palatable for most people and despite what people are giving up I think most of us will be better off. 

"There’s that optimistic side of me again, spouting off bullish prose. But seriously, I think if we all had a few more bucks the velocity of money would increase and tax revenues along with growth would both improve. I’ll get out of the pulpit now and talk markets. 

"Not exactly a “Buy the rumor sell the news” event for the tax plan but the market didn’t rejoice much. After seeing the earnings after-hours today from AAPL and others, I think we’re going to see some bullish action early on tomorrow morning. Let’s hope the momentum can continue." -- Dave Bartosiak

All the Best, 
Jim Giaquinto

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