Health Care Circus, Earnings In Focus
I am technology-challenged today (why my laptop had to crap out 21 days before I get my big desktop rig back is beyond me), so I am going to keep this brief.
Health Care and earnings are the focal points in the early going today and if the early action is any guide, we can probably look forward to more of the same. I.E. A grinding, low volatility stock market that moves up and down in a tight range, with a slight upward bias.
On the health care front, after two more GOP senators announced their opposition to the GOP bill, Senate Majority Leader Mitch McConnell has abandoned efforts to get an ACA replacement bill passed. While the markets don't seem to care too terribly much about the health care circus, apparently the public does. A recent Bloomberg News poll showed that health care is the most important issue at this time. Yep that's right, health care came in ahead of jobs, terrorism and the immigration issue (e.g. building the "wall" on our border with Mexico).
However, it is important to keep in mind that some investors/analysts/pundits see the failure of the GOP to pass a health care bill as a warning sign regarding the Trump administration's agenda. More specifically, the worry is that tax reform and economic stimulus will either be pushed back further than anticipated or, like the ACA "repeal and replace" effort, be DOA as well. Stay tuned.
On the earnings front, Netflix (NFLX) surprised to the upside and is getting the anticipated bump in early trade while Goldman (GS) and Bank of America (BAC) are struggling with trading profits.
In my humble opinion, the question of the day is if the current earnings parade (and the associated outlook/guidance for the upcoming quarters) will be good enough to allow traders to continue to look ahead - and to ignore sky-high valuation levels in the stock market.
More on this topic tomorrow - assuming I can find a computer to hunt and peck on, of course.
Thought For The Day:
Empty pockets never held anyone back. Only empty heads and empty hearts can do that. - Norman Vincent Peale
Current Market Drivers
We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).
1. The State of the U.S. Economic Growth (Fast enough to justify valuations?)
2. The State of Earnings Growth
3. The State of Trump Administration Policies
4. The State of Fed Policy
Wishing you green screens and all the best for a great day,
David D. Moenning
Chief Investment Officer
Sowell Management Services
Disclosure: At the time of publication, Mr. Moenning and/or Sowell Management Services held long positions in the following securities mentioned: none. Note that positions may change at any time.
Disclosures
The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.
Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.
The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
David D. Moenning is an investment adviser representative of Sowell Management Services, a registered investment advisor. For a complete description of investment risks, fees and services, review the firm brochure (ADV Part 2) which is available by contacting Sowell. Sowell is not registered as a broker-dealer.
Employees and affiliates of Sowell may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Positions may change at any time.
Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.
Advisory services are offered through Sowell Management Services.