Monday, March 27, 2017
Getting too far into the weeds of national politics isn’t a good idea when discussing market activity, generally, and though this column has at times drifted toward them, we don’t want to do this today, either. The temptation, of course, is to discuss the healthcare reform measure that failed to come up for a vote in the House of Representatives last week, and what this may mean for the overall efficacy of the Trump administration, which is still fewer than 100 days old. But let’s not bite that hook.
Looking ahead, corporate tax reform and infrastructure spending are expected to dominate headlines, with healthcare fading into the background. Yet the same group of lawmakers are now being viewed as potential disrupters to these measures, as well — the Freedom Caucus (nee Tea Party) — as they are unlikely to see tax cut measures managing a revenue-neutral balance, and infrastructure projects only putting more costs onto the deficit.
These measures do appear to be affecting the market, however, which is why many market analysts are still talking about these topics. After all, construction and manufacturing businesses and their subsequent stock prices have performed very impressively in 2017 and going back to the day after Election Day largely on the idea that infrastructure buildouts — be they roads and bridges, Great Walls or both — would naturally provide a boon going forward. And corporate tax cuts would bring a huge boost to company bottom-lines across the board.
With these measures now receding from “slam-dunk” status, market participants have now grown wary, and 40 minutes before the first opening bell of the week the S&P 500 is -21, the Dow -161 and the Nasdaq -41. That said, both the Dow and S&P are both +4% year-to-date and 20-day moving averages remain to the positive. But it’s difficult to avoid the fact that a stall in the national political agenda is indeed having a negative effect at present.
Elsewhere, we look toward Q1 earnings season, which will follow the pleasantly surprising Q4 earnings which grew nearly 8%. This was only the second quarter in a row with positive earnings results, before which we’d endured a long earnings recession. Q1 estimates are also solidly in the green as of this last week of the quarter, so at least we’ve got that to look forward to.
For a strong, comprehensive read on what’s to come in Q1, please read Zacks Director of Research Sheraz Mian’s latest Earnings Preview report here.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>
Image: Bigstock
Sailing Past Healthcare Reform: Clear or Cloudy?
Monday, March 27, 2017
Getting too far into the weeds of national politics isn’t a good idea when discussing market activity, generally, and though this column has at times drifted toward them, we don’t want to do this today, either. The temptation, of course, is to discuss the healthcare reform measure that failed to come up for a vote in the House of Representatives last week, and what this may mean for the overall efficacy of the Trump administration, which is still fewer than 100 days old. But let’s not bite that hook.
Looking ahead, corporate tax reform and infrastructure spending are expected to dominate headlines, with healthcare fading into the background. Yet the same group of lawmakers are now being viewed as potential disrupters to these measures, as well — the Freedom Caucus (nee Tea Party) — as they are unlikely to see tax cut measures managing a revenue-neutral balance, and infrastructure projects only putting more costs onto the deficit.
These measures do appear to be affecting the market, however, which is why many market analysts are still talking about these topics. After all, construction and manufacturing businesses and their subsequent stock prices have performed very impressively in 2017 and going back to the day after Election Day largely on the idea that infrastructure buildouts — be they roads and bridges, Great Walls or both — would naturally provide a boon going forward. And corporate tax cuts would bring a huge boost to company bottom-lines across the board.
With these measures now receding from “slam-dunk” status, market participants have now grown wary, and 40 minutes before the first opening bell of the week the S&P 500 is -21, the Dow -161 and the Nasdaq -41. That said, both the Dow and S&P are both +4% year-to-date and 20-day moving averages remain to the positive. But it’s difficult to avoid the fact that a stall in the national political agenda is indeed having a negative effect at present.
Elsewhere, we look toward Q1 earnings season, which will follow the pleasantly surprising Q4 earnings which grew nearly 8%. This was only the second quarter in a row with positive earnings results, before which we’d endured a long earnings recession. Q1 estimates are also solidly in the green as of this last week of the quarter, so at least we’ve got that to look forward to.
For a strong, comprehensive read on what’s to come in Q1, please read Zacks Director of Research Sheraz Mian’s latest Earnings Preview report here.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>