Tax Cut Party
It’s party time!
Never mind that taxes cuts will be greatly diluted, and probably won’t happen well into 2018.
The mere whiff of the prospect that Uncle Sam’s take is about to be shaved by pennies was enough to break a downtrend in share prices that was starting to get worrisome.
We got the short cover.
The big question now is “Can we maintain developing momentum into decisive new highs?”
Is a mere 3% enough of a correction to clear out all of the stale long positions?
Or will we revisit the lows, once Washington goes quiet?
We’ll find out next week after all the month-end aberrations finish.
One thing is certain.
The short-term economic numbers are about to take a swan dive, as the devastating impact of Hurricane Harvey works its way through the system.
Will we get the kneejerk negative reaction?
Or will investors “look through” to a year end rally.
Again, another conundrum.
And then we have the Apple Dilemma.
The shares have a notorious history of peaking on major iPhone generational launches. Just looked at what happened in 2014, when it began a 32% plunge.
Are we setting up for a replay after the September 12 announcement? If so, it will definitely take the rest of FANG with it.
This is why I have been focusing on gold (GLD), (ABX), (GDX) and domestic names (HD), (UNP), (X), and have temporarily quit selling short the bond market (TLT ).
I have also been more than the usual amount active in trading the Volatility Index (VIX), (XIV).
The August Nonfarm Payroll Report certainly isn’t giving bulls any comfort.
The number came in at a weak 156,000, producing a rare uptick in the headline unemployment rate to 4.4%.
The June and July reports were revised down a sharp 41,000.
The long term structural “discouraged” U-6 Unemployment Rate held at 8.6%.
Manufacturing led with +36,000 in job gains, followed by +28,000 for Professional and Business Services, and +20,000 for Health Care.
Completely missing in action was any contribution from Retail, as that industry implodes from online competition.
Local government jobs were the biggest loser, with -9,000 going down the tubes.
The most important release of the coming week will be the Fed Beige Book on Wednesday afternoon.
But much of the focus will still be on Hurricane Harvey.
I gave my kids $2 each today so they can buy a popsicle at school. A local entrepreneur donated 1,000 of them, and the $2,000 raised will be donated to an “adopted” middle school in East Texas.
Clever.
On Monday, September 4 the US markets will be closed for Labor Day. The rest of the world will slow to a crawl.
On Tuesday, September 5 at 9:00 AM EST we get the July Factory Orders, a lagging national read on durable and non-durable goods orders.
On Wednesday, September 6, at 2:00 PM EST we get the Federal ReserveBeige Book, a prelude to the September 19-20 FOMC Meeting.
At 10:30 AM EST the weekly EIA Petroleum Status Report is out, which will be meaningless in the wake of Hurricane Harvey.
Thursday, September 7 at 8:30 AM EST we learn the Weekly Jobless Claims. This will be the first statistical read of the true economic impact of Hurricane Harvey.
On Friday, September 8 at 10:00 AM EST the Whole Trade figures are produced, a check on the health of wholesalers nationally.
Wrapping up the week at 1:00 PM is the Baker-Hughes Rig Count, which has been up for most of the last year, boding ill for oil prices.
As for me, I will be at a beach house in remote Mendocino County provided to me by a very happy client, dodging the worst heat wave in California history.
I worked the hardest in my life in August to get you that 18.38% monthly return, so for the next three days, you’ll find me focused on Monopoly, Risk, and Jenga.
It’s supposed to be 116 degrees inland today, and the heat is being magnified by multiple out-of-control forest fires in the North.
Even though the output of my rooftop solar panel array was supposed to decline by 1% a year, it has in fact been increasing annually.
If only the panel salesmen knew!
This global warming thing is clearing getting worse.
Good luck and good trading!
