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Morning Commentary

Still on Eggshells

By Charles Payne, CEO & Principal Analyst
3/13/2017 9:54 AM
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Usually, it’s the week that ends with the jobs report that creates the most unease in any given month, but this week has its share of issues that could preoccupy Wall Street.


Today, The House of Commons will vote on whether to accept amendments attached to a draft law that would allow Theresa May to file for Britain’s EU exit as early as tomorrow.  But there are issues with the drafts from the unelected House of Lords that has many saying it’s designed to derail Brexit.

In addition, Scotland, which is Pro-EU, is indicating there will be another vote for independence.

General elections will be held in The Netherlands this week where rioting -mainly by Turkish immigrants - increased the chance of the anti-immigration/Euro-skeptic party (PVV) winning the majority of votes.  Experts say there is no chance of a coalition government, but the message from the people would be clear.

Chancellor of Germany, Angela Merkel, visits the White House this week where she meets her ideological opposite, President Trump.  A cordial meeting would calm markets, which expects the two leaders to work together on everything from terror to trade.


There is a ton of economic data out this week including:

Plus, the Federal Reserve is expected to hike rates this week.

The Market

The market rally is a little tired and showing signs of fatigue.  A four week market winning streak snapped, but I happen to like when the market backs and fills in an orderly fashion. And with more than 100 straight sessions without a decline of more than 1% for the S&P 500, trading has been orderly.

There is no doubt, everyone from novice to seasoned money managers become anxious after the kind of run we’ve experienced.

But those nerves should be quelled with evidence that the underlying fundamentals are improving as well. 

The foundation for an economy that justifies higher stock prices begins with Main Street enthusiasm. 

Each sentiment survey since the election points to greater confidence, but the best measure is unemployed folks hitting the bricks.  Last month, the civil labor force increased by 340,000 lifting the participation rate back to 63.0.  

That’s the highest level in a year, and a pivotal point, which could indicate an inflection point that moves the hope-needle beyond the voting booth as folks seek out opportunities.

The other key Main Street foundation comes from higher wages.   On that note, the 2.8% year over year wage improvement in February is important, and hints at faster wage increases, especially for skilled workers.


Today’s Session

The market begins the session with a grand slam deal with Mobile Eye (MBLY) being bought by Intel (INTC) for $15.3 billion or $63.54 per share in cash.

The deal is a reminder there is a lot of money sloshing around on balance sheets that won’t go into dividends or buy backs.   It’s also an example of companies staying relevant, even hot names that not long ago were the upstarts.  Last year, Microsoft made a monster bid for LinkedIn and now Intel for Mobile Eye.

In response to New York Magazine article claiming Mr. Murdoch has pushed Fox News more pro-Trump, I added the follow to a News Blog:
"a more pro-Trump direction?
I can hardly watch it anymore. At least Fox Business has a minimum of seditious "Resisters" as counter-pointers. Ive started watching the brilliant Charles Payne instead of Baier."


Fred Logan on 3/13/2017 10:35:57 AM
Now that we have REAL "hope and change," it is nice to see just how things work when people truly have hope that things will get better.

The short position in MBLY was around 15% I see, so being taken out on their swords couldn't happen to a nicer group of investors...

While all the petulant adolescents aka Democrats have tantrums and need safe places to recover from their feigned loss of being and identity, the rest of us are positioning for make back for the last 15 years in the political, financial, and economic wilderness.

Everyone get your smores supplies and gather by the campfire!

Ray Weldon on 3/13/2017 10:40:08 AM

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