Forgetting the traditional market news, as we began last week both the NASDAQ and Russell 2000 were at critical support. A rally Monday showed those support levels held, giving bulls breathing room. We’ll discuss this more below after we get through the more fundamental news items that transpired. Traders seemed to breath easier on Monday seeing no escalation with North Korea and came in ready for a bit of a relief rally.
The lack of a nuclear test from North Korea over the weekend did much to reverse defensive positions adopted by traders heading into the weekend, said Ian Winer, director of equity trading at Wedbush Securities.
It was a very heavy week of S&P 500 type earnings with banks leading the way in the first half of the week. Then a series of large sized companies across the spectrum.
The tax cuts are coming! The tax cuts are coming! Thursday saw another rally as the “Trump tax relief” was hinted at – yet again. The market has seemingly rallied on this “prospect” countless times since November.
Mnuchin, speaking at an Institute of International Finance conference, said a Trump tax bill is likely to be unveiled in the near future, alleviating fears that the tax cuts promised by the president may have been put on the back burner after the Republicans failed to vote on the American Health Care Act last month. “[His] comments today were icing on the cake and are giving investors confidence that the long term economic backdrop will be getting better,” said Karyn Cavanaugh, senior market strategist at Voya Financial.
Then Friday, Trump himself chimed in to the Associated Press.
In an interview with The Associated Press, Trump says the plan will result in tax cuts for both individuals and businesses. He would not provide details of the plan, saying only that the tax cuts will be “bigger I believe than any tax cut ever.” The president says the package will be released on “Wednesday or shortly thereafter” — just before his 100 day mark in office.
As we noted last week in our recap, it would be a quiet week on the economic news front and nothing of note to report here.
Goodness gracious, the European Central Bank and Bank of Japan have bought over 1 TRILLION worth of assets year to date – and are on a pace to suck up nearly 4 TRILLION by end of year. Geez Louise. (yes I put that in red font!)
Hartnett and company argue that this continuing “liquidity supernova” remains the “best explanation” why global stocks and bonds are “both annualizing double-digit gains [year to date] despite Trump, Le Pen, China, macro…”