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Ahead of Wall Street

Thursday, February 23, 2017

The Dow keeps on rolling, now for nine straight days worth of gains. Lately, we’d seen pre-market activity try to pump the brakes a bit, opening normal trading days slightly to the negative or right around break-even. But the animal spirits would eventually return again, continually posting all-time highs. It’s been a good time to be a market bull.

Futures look stronger early Thursday than they have earlier in the week, bolstered by another healthy Jobless Claims report. Also, an interview CNBC gave to Treasury Secretary Steve Mnuchin this morning illustrated the Trump administration’s concentrated interest on passing tax reform through Congress. Mnuchin established a timeline — before the August recess — to enact pro-business tax reform measures that promise to be the most significant since the Reagan administration.

Less clear were the issues regarding border taxes and what the Treasury expects to do about a strengthening dollar in the global economy, which looks to cut into U.S. competitiveness. But an August timetable for tax reform — which has already been at least somewhat priced into the market — is proving to have a positive effect on today’s early trading.

Initial Jobless Claims rose by 6000 last week from the previous week to a still-strong 244K. For the past few weeks we’ve seen another ratcheting down in jobless claims, from the 250-275K we saw for much of 2016 to perhaps a 225-250K for the near future. Continuing claims fell from 2.08 million two weeks ago to 2.06 million last week, also historically low though still slightly above the 2 million mark we saw briefly not too long ago. More good news.

Fed minutes seem to indicate more willingness to raise interest rates another quarter point at the FOMC’s March meeting, but the jury is still out. Jobs numbers of late show a labor market tightening, so if we see economic data pointing to stronger inflation metrics, this will probably boost the likelihood of a March hike even further. If not, then not. But even a range of 75-100 basis points wouldn’t throw a wet blanket on this hot market, at least not too much.

Tesla Motors TSLA missed Q4 estimates after yesterday’s close, but orders are way up — nearly 50% — for Model S and Model X cars. And the Model 3, Tesla’s least expensive sedan with a price tag of $35K, remains on track for a July launch, which should bolster company revenues, which did surpass expectations in Q4. For more on Tesla’s earnings report, check here.

Mark Vickery
Senior Editor

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Earnings and Economic News

Key Earnings Reports For Feb 23, 2017

Economic Event Reported
(+) Crude Inventories - Feb 23, 2017 --
(+) Bloomberg Consumer Comfort Index - Feb 23, 2017 --
(+) Initial Claims - Feb 23, 2017 --
(+) Treasury bills (3 mth) - Feb 23, 2017 --
(+) Federal Funds Rate - Feb 23, 2017 --
(+) Treasury notes (10 yr) - Feb 23, 2017 --