By: Kent Engelke | Capitol Securities
President Trump addresses a joint session of Congress tomorrow. It has been about 3 weeks since the President stated that there will be “massive tax reform,” the precursor for the recent advance. Will Trump put forward his tax proposals?
As stated many times, the averages have advanced believing the President will be able to pass his legislative agenda, a tall order given the utter rancor in Washington. Business and consumer confidence has also surged because of Trump’s pledge to roll back taxes and regulations.
To write the obvious, the current advance may be the epitome of “buy on rumor and sell on fact” or “averages priced to perfection” for as stated last week, the rally since Trump was elected is the greatest since LBJ’s election. Wow! This is in the face of an Administration that is in total chaos according to The Establishment.
Speaking of confidence, the University of Michigan Confidence Survey dropped from January’s level which was the highest since 2004. February’s level still exceeded the consensus view and is regarded as “very optimistic,” an environment I think is incredible given the utter rancor in the media, politics and in society overall. As inferred, confidence levels are still higher than they were before the election.
There is little I can write about Friday. Markets are vastly overbought, perhaps searching for a catalyst for some much needed profit taking.
What will happen this week?
Last night, the foreign markets were mixed. London was up 0.12%, Paris down 0.06% and Frankfurt up 0.16%t. China was down 0.54%, Japan down 0.91% and Hang Sang down 0.17%.
The Dow should open flat ahead of tomorrow’s speech by the President. The 10-year is off 4/32 to yield 2.32%.