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All Eyes On Congress As The Market Sits At Record Highs

The markets pulled back a bit yesterday ahead of today's spending bill deadline.

Who knows what will happen this go around.

It appears that Congress will try and pass a Continuing Resolution, kicking the can down the road for another couple of weeks.

We shall see. But the issues that continue to create a fissure in this process, i.e., DACA and border security, will have to be dealt with eventually. If that means sooner rather than later, or later rather than sooner, then so be it. The market just wants to know when the next manufactured crisis will be.

In other news, yesterday's Weekly Jobless Claims fell more than expected, declining by -41,000 to 220,000 vs. the consensus for 250K.

And Housing Starts slipped to 1.192 million units (annualized) vs. the previous month's 1.297 mil. and views for 1.280 mil. Analysts were quick to speculate whether this was a one-time drop in an otherwise robust housing starts environment. Permits on the other hand increased to 1.302 mil. units vs. the previous month's 1.298 mil. and views for 1.300 mil. It was noted that starts can be affected by weather. And we've had plenty of inclement weather lately. The silver lining in this report however was the continuing build in the backlog for future new starts with a 1.8% gain in single-family homes.

Overall, the economy continues to strengthen, the benefits of the tax cuts are already starting to be felt, and corporate profits are surging and expected to only get better.

Any volatility due to a potential spending bill snafu should be short-lived. So be prepared to act if we see a pullback.

And if we don't see a pullback, be prepared to act anyway, as this year is shaping up to be a historic one!


Kevin Matras

Executive Vice President, Zacks Investment Research


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