By: Kent Engelke | Capitol Securities

Markets fluctuated on a flurry of policy news ranging anywhere from Nafta to trade reform, to the budget to healthcare and to taxes. Oil tumbled on concerns over a supply glut as Libya reopened its biggest field while earnings largely matched expectations.

Today, initial estimates of first quarter GDP is released. Analysts are expecting a 1.0% growth rate and a 2.0% rise in the core PCE or the Federal Reserve’s preferred inflationary indicator.

As noted many times the confidence has soared because of Trump’s pro-growth proposals, proposals that have yet to be legislated.

In my view, Washington is playing roulette with our economic future. If our elected members are for the people, of the people, charged with increasing economic well-being for the general economy, why the delay in passing key regulatory and tax reform?

I can write volumes answering the above question.

There have been recent remarks about shrinking volatility. While this may be correct in the aggregate, in my view, reality is considerably different. There is intense volatility beneath the surface where cycles that used to take 18 months now take 18 days. For example, the short interest in the Russell 2000. About two weeks ago, short interest rose by the greatest amount since 2008. Bloomberg wrote yesterday that late last week actual short interest in the Russell 2000 swelled to the most since September 2014.

Two weeks ago, the Russell 2000 was at its annual lows, reversing the gains from the election, trading at its 50 day moving average lines. Earlier this week, it rose to a record. Wow!

This is volatility, volatility the result of technology based trading.

And then there is oil. Crude has been locked in a range of $48-$55 for the past year. It has also traded in this range during the past six weeks. Oil securities however are grossly underperforming and are priced for $40 crude.

There is a historical disconnect between the price of oil and the value of oil securities. Something has to give. Either oil the commodity will drop or oil securities will rally to restore market balance. I think the latter.

In my view, the vast majority of historians will view 2017 as a tectonic transition year, where generational trends end and another commences. This is not a radical thought. Globalism is on its heels with the Establishment vehemently fighting to maintain power and its perceived global dominance.

Last night, the foreign markets were mixed. London was down 0.34%, Paris was up 0.23% and Frankfurt was up 0.02%. China was up 0.08%, Japan was down 0.29% and Hang Sang was down 0.34%.

The Dow should open flat even as two mega-capitalized technology leviathans exceeded profit expectations. Geopolitical tensions are perhaps weighing upon sentiment. However, the direction of the opening can change radically given the potential significance of the 8:30 data. The 10-year is flat at a 2.31% yield.