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Economy Trumps Sequester High Noon

Kevin Cook here again for Steve...

What if Congress had a gunfight at high noon and investors didn't care? That's what happened this week. While the spending cuts and budget battles certainly matter, Wall Street has become immune to the political noise. In the big picture, we want Washington to care about deficits and to function.

And as long as those are happening to some degree, institutional investors can get back to their primary vocation: allocating capital and picking stocks in a bull market. Because we'd likely also prefer some of the companies we pick to function with less dependence on government spending programs.

We want an expanding economy and consequent earnings growth to be the foundation of our investment thesis. For that, Thursday gave us a strong Chicago PMI confidence boost, a welcome surprise dip in jobless claims back below 350k, and a slight upward revision to Q4's "Cliff dive" GDP.

Bottom line: Investors are looking past DC, and the last GDP dive, to coming quarters of growth in the economy. With the durability of this recovery now benefiting from the resurgence in housing, today we can probably ignore the White House showdown and focus on the manufacturing and construction data.

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Best,

Kevin Cook

Senior Stock Strategist

Zacks Investment Research

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The turbulence at HA is no joke.


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Zacks experts provide their read on the potential market moving news in focus.

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