I might be dating myself, but what is happening in Washington reminds me of “Let’s Make a Deal,” one of the longest running TV game shows. This week’s market action was dominated by two big deals.
First, the Senate deal on Taxes (including several special side deals) and secondly, Flynn’s guilty plea deal with Mueller.
The markets mostly loved it. The Dow was up +2.96% for the week, led by value stocks.
The original Let’s Make a Deal show featured contestants dressed in outrageous costumes competing to get noticed by Monty Hall (the game show host). They vied to make a deal with him by guessing which of three curtains hid the best prize. The contestants hope was to win something big like a car.
Many walked away with a donkey or a pig when they chose the wrong door. The new tax plan was altered and scribbled at the last moment (mostly by lobbyists). As so many question what it is behind the curtain, the similarities to the game show are apparent and overwhelming.
However, those left holding the pig may not be the Senators who voted for it. So here is an inside tip, assuming you have not had a chance to read the Bill. Next year, don’t forget to take the exemption on the expenses for your personal jet.
Meanwhile, headwinds emanated not too far from the Senate chambers due to a deal cut between Trump’s former National Security Advisor, Mike Flynn and the FBI.
On Friday, Flynn flinched and pleaded guilty to lying about his involvement with the Russians. Volatility soared 11% intraday, as equities tanked almost 2% on the news. Yet, the market, as it has done all year, shook it off, and the Dow closed -.16 %.
How far this goes up the chain to Trump and his inner circle remains a huge wildcard.
NASDAQ stocks dropped hard on Wednesday after Goldman Sachs put out a hit on FANG and everything tech, especially scorching the hot Semi’s.
Value stocks found bids and might have bottomed after over a decade of underperformance. Emerging markets passed the baton to developed markets. Furthermore, US equities regained leadership.
