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One week before the official start of spring, New York City finds itself buried in snow ahead of the bell today. Mayor DeBlasio has declared a state of emergency for the city, closing schools and businesses across Manhattan. Between 16 inches and 2 feet of snow are expected before the blizzard is over. And market futures are down at this hour: S&P 500 -7 points, Dow -51 and Nasdaq -13.
We’re still near all-time highs even a week and a half from market peaks. Some very real headwinds have entered the market picture lately, even without this mondo snowstorm that is canceling flights at airlines from United Continental (UAL - Free Report) to JetBlue (JBLU - Free Report) . And they start with a Fed interest rate hike tomorrow that has now been baked into the cake, market-wise.
The Federal Open Market Committee (FOMC) meets today (assuming Washington DC is not experience white-out conditions as well) and concludes its policy discussion tomorrow, when Chairwoman Yellen is expected to explain the reasons behind the (assumed, for now) 25 basis-point rate hike, and what the Fed will be looking for as 2017 moves along. Basically, is it still 3 interest rate increases we can expect? More? Fewer?
There is also some concern ongoing regarding the replacement of Obamacare with a new nationwide health care system under the Trump administration (Trumpcare?). The nonpartisan Congressional Budget Office (CBO) has issued a report that 24 million Americans would lose health insurance over the next decade under the new plan, including potentially 18 million by 2018 alone. Health and Human Services Secretary Tom Price has taken issue with this figure, even though the White House had estimated the CBO would see 26 million removed from the rolls over the next 10 years.
This obviously has serious implications for the health care and insurance industries, but it also raises questions whether or not Congress will get bogged down in health care policy-making and become unable to fit a major tax cut for corporations and individuals, or a massive infrastructure program, into fiscal 2017. Because these pro-market events are already at least partially reflected in equities prices, such delays may cause a near-term market sell-off. It’s likely too early to press the panic button, but some market participants may be turning a wary eye toward excess buying at this stage.
This morning also brought forth new Producer Price Index (PPI) numbers: +0.3% month over month, following a last read of +0.6%. Ex-food & energy, year over year we see PPI +1.8%, indicating modest but persistent inflation creeping into the domestic economy. Again, these numbers do nothing to foster a harrowing outlook near-term, but certainly growing inflation is something the Fed will keep a close eye on once this latest interest rate hike is enacted.
Image: Bigstock
What's in the Red and White All Over? Wall Street
Tuesday, March 14, 2017
One week before the official start of spring, New York City finds itself buried in snow ahead of the bell today. Mayor DeBlasio has declared a state of emergency for the city, closing schools and businesses across Manhattan. Between 16 inches and 2 feet of snow are expected before the blizzard is over. And market futures are down at this hour: S&P 500 -7 points, Dow -51 and Nasdaq -13.
We’re still near all-time highs even a week and a half from market peaks. Some very real headwinds have entered the market picture lately, even without this mondo snowstorm that is canceling flights at airlines from United Continental (UAL - Free Report) to JetBlue (JBLU - Free Report) . And they start with a Fed interest rate hike tomorrow that has now been baked into the cake, market-wise.
The Federal Open Market Committee (FOMC) meets today (assuming Washington DC is not experience white-out conditions as well) and concludes its policy discussion tomorrow, when Chairwoman Yellen is expected to explain the reasons behind the (assumed, for now) 25 basis-point rate hike, and what the Fed will be looking for as 2017 moves along. Basically, is it still 3 interest rate increases we can expect? More? Fewer?
There is also some concern ongoing regarding the replacement of Obamacare with a new nationwide health care system under the Trump administration (Trumpcare?). The nonpartisan Congressional Budget Office (CBO) has issued a report that 24 million Americans would lose health insurance over the next decade under the new plan, including potentially 18 million by 2018 alone. Health and Human Services Secretary Tom Price has taken issue with this figure, even though the White House had estimated the CBO would see 26 million removed from the rolls over the next 10 years.
This obviously has serious implications for the health care and insurance industries, but it also raises questions whether or not Congress will get bogged down in health care policy-making and become unable to fit a major tax cut for corporations and individuals, or a massive infrastructure program, into fiscal 2017. Because these pro-market events are already at least partially reflected in equities prices, such delays may cause a near-term market sell-off. It’s likely too early to press the panic button, but some market participants may be turning a wary eye toward excess buying at this stage.
This morning also brought forth new Producer Price Index (PPI) numbers: +0.3% month over month, following a last read of +0.6%. Ex-food & energy, year over year we see PPI +1.8%, indicating modest but persistent inflation creeping into the domestic economy. Again, these numbers do nothing to foster a harrowing outlook near-term, but certainly growing inflation is something the Fed will keep a close eye on once this latest interest rate hike is enacted.
Mark Vickery
Senior Editor
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