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Afternoon Note

DC Confusion Curbs Rally

By Charles Payne, CEO & Principal Analyst
2/7/2017 1:58 PM
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The market popped out the gate this morning only to stall, and now yield ground, after Speaker Ryan commented on Obamacare.  While the wish list includes repealing and reforming the so-called Affordable Health Care law, many investors are concerned it’s a more daunting task than Washington Republicans would like to admit.

I never believed it was necessary to have a laundry list of things done in the first 100 days, but the market has to know tax cuts are coming.  There is a difference between major tax reforms and lowering rates, the latter are critical to keeping animal spirits alive.  There is also confusion over a border tax, a border adjustment tax and other issues pertaining to balancing the budget that will see a jump in spending out of the gate.

I appreciate the Dow Jones Industrial Average hitting a new all-time high today driven by some of the oldest publicly traded stocks around:

I think it’s important the Dow stay in the plus column, and even finds a way to trade even higher. 

I continue to caution that while Washington, D.C. is sucking all the oxygen out of the room.  I don’t think that most of the wish list, including a massive infrastructure plan, will happen.  But with the lulls and delays, risks increase to some Trump names that have gone up too far and too fast, like Vulcan Materials (VMC), which we closed out on this service and our trading service.

The VMC earnings miss is just a reminder that good stocks can get over their skies, but this is a name I want to be long once D.C. gets some of the bigger deals and promises in the pipeline.

 


Comments
It is almost like we continue to have a "Do-Nothing" Senate and House, who have no intention to create positive change. The GOP still suffers from division. The DEMS are outrageous obstructionists. If you are a "Deplorable", you are really are not being represented. Trump has done what he promised; however no one in DC seems to care, nor do they want to cooperate. Sad.

FMT on 2/7/2017 2:15:03 PM
Charles - If the Left and their media would quit putting a negative spin on every idea that the President comes up with, the process and people's attitude would go forward and things would happen sooner.

William S. Berown on 2/7/2017 2:15:54 PM
I agree with WSB, but these Whitehouse statements must be viewed with caution. Some times there is the idea but no legs to support it.

L Goodman on 2/7/2017 2:46:01 PM
People sometimes forget that legislation is created by processes and rules along the way to finding consensus. Obama skipped the consensus part. Things like filibusters, reconciliation, etc. are parts of strategies to get things done. Don't disparage the folks trying to make it work.

Neal on 2/7/2017 3:22:17 PM
Agree with WSB and LG, but reality dictates that the (so-called) "drive-by" media are NEVER going to give Trump any credit for anything he, or his administration, DO. Let's face it, folks: If you want to really be "in the know," trust the BBC for your information on what's happening in this country. As a 30+ year radio/broadcast journalist...that's my BEST advice to any/all who seek "truth" in events here in the USA.

James Warlin on 2/7/2017 4:21:43 PM
This president (although having some provocative and interesting ideas) does not know how to execute and act 'statesman like.' I also (as a very staunch Conservative), think the trade law changes are a negative for American consumers. I know a lot of people are not educated on economics so....pipe down and stay in your lane you dolts!

Tara on 2/7/2017 6:25:45 PM
525 squirrels is too many to herd no matter how good the herder is! Everyone of those 525 squirrels thinks they know more then all the others because they are mostly lawyers who are the worst of know-it-alls! The resulting disputes over how many angels can dance on the head of a pin accomplish nothing much and leave us all gaggingon bile! We are sadly going to be disappointed but if the only thing that gets done is to appoint a couple Conservatives to
the SCOTUS we will be "saved"! End ACA HOORAY!

Tom Claridge on 2/7/2017 6:37:37 PM
take fear out of your investments and understand this will be one of the best periods in the markets history buy high quality stocks and look for dow 25000 35 year market pro

tom busby on 2/8/2017 6:34:43 AM
I like your enthusiasm Tom and think the fundamental underpinnings are perfectly positioned...of course there could be pitfalls and some hurdles but all pieces are in place. CP

Charles Payne on 2/8/2017 6:37:53 AM
 

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