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Government Shutdown Avoided Temporarily

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A tentative deal is reportedly being reached in the U.S. Congress, whereby another partial government shutdown is expected to be avoided before the February 15 deadline. This has helped spur market futures well into the green — especially the blue-chip Down Jones index, which is currently up 180 points in early trading.

The specter of another multi-week shutdown had put a dark cloud of dread over much of both houses of the U.S. Legislature, and the White House has not expressed much appetite for going down the same road that furloughed 800K federal workers for 5 weeks at the start of 2019. Removing these dark clouds is presenting a sunny morning ahead of the opening bell.

Speaking of deadlines, March 1 presents the U.S. with another doozy: the advance of tariffs on Chinese goods from their current 10% rate up to 25%. Analysts have already spotted notable weakness in China’s economy, and perhaps the current trade war had something to do with this. Bringing a new tariff rate 2 1/2 times larger would, it stands to reason, make things even tougher on the second-largest country in the world.

But the U.S. would also be forced to pay the piper; some economists have brought up the idea of a domestic recession on the horizon due to a prolonged trade battle with China. This becomes even less appealing to federal politicians as the foothills of the 2020 General Election have already been reached, and a recessionary climate might wreak havoc on electability.

As Q4 earnings season continues to wind down — heading toward the Consumer Discretionary sector until next week and beyond finishing off with Restaurants and Retail — we also expect plenty of perspective and opinion from members of the Federal Open Market Committee (FOMC). Fed Chair Jerome Powell and other “centrists” regarding interest rate policy, Atlanta’s Raphael Bostic and Philadelphia’s Patrick Harker, are expected to be heard from this week, along with slightly more hawkish members Loretta Mester from Cleveland and Esther George of Kansas City.

Why these forthcoming statements are expected to be significant is because the next scheduled meeting on FOMC policy is March 19. At that meeting, no interest moves are anticipated as economic turbulence — due to the still-unresolved U.S.-China trade war and a new equilibrium in the European Union with the U.K. Brexit still apparently on the way — clouding global economic perspectives. When the FOMC voted to raise another quarter-percent to 2.25-2.50% back in December, stock markets tumbled and the Fed was openly derided as being out of touch with current economic realities.

Zacks Rank #2 (Buy)-rated Under Armour (UAA - Free Report)  topped estimates on both top and bottom lines this morning, beating by more than 100% to 9 cents per share in the company’s Q4. Revenues of $13.9 billion outperformed expectations by 1%. This marks the third earnings beat for the sports apparel giant in the last four quarters. Share up up just slightly in the pre-market, however; this follows growth of 17.6% year to date.

Chicago-based real estate major Jones Lang LaSalle (JLL - Free Report)  also surpassed projections ahead of this morning’s open, reporting solid beats of $5.99 per share on $4.89 billion in revenues, up 26.4% and 3.88% from the Zacks consensus, respectively. Shares have grown 15.5% since the start of the year, although remain well off the 52-week highs reached in the summer of last year.


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