LOTS OF MARKET NOTES

In no particular order:

The dollar is breaking to new lows. The euro and pound are breaking to near yearly highs…out of clean bases. We suspect this is part of why commodities keep moving higher.

Major indices are stretched, extended and overbought as much as we have seen in a long, long time. Names like BA and CAT …we do not know how to describe it. It is now feeling somewhat climactic. If that’s the case, there will be a big correction out of it…which is way overdue anyhow. Climactic moves serve to suck in the masses AFTER a big run. We will only deal with this if we see it. So far, nothing doing but we have studied this type of action before.

Earnings estimates are said to be going up almost 5% because of the tax bill.

The only real bearish areas are utilities and real estate.

Areas that could be emerging now are cruise lines, airlines,and defense. A couple of airlines have already moved out.

Since we told you to put commodities and energy on your screens, they are up anywhere between 10-20%. Pullbacks are needed but aint happening just yet. Copper, palladium and all that stuff have been strong.

Look where the GBTC held Thursday. (bitcoin etn). Yes, technicals may be working with even bitcoin.

Many are worried and many are talking about the bond market. Economics 101 does dictate that all this money printing and easy money should cause a big bout of inflation. If that’s the case, bond yields will eventually reflect it. Watch 2.65 on the 10 year. A move above takes you up to 3%…but that’s no big deal.

A massive amount of earnings start coming out this week. So far, we have seen decent reactions even though things are extended.

And lastly, do not worry about a government shutdown. The longest one lasted 3 weeks under Clinton and the world did not end. Essentials will be open and everyone will get paid.

PRE MARKET

NASDAQ futures flat. S&P futures up a wee bit.

Very strong yesterday. COMMODITIES continue to lead in a big way but extended here. BOEING acting like an internet stock from 99.

AIRLINES like AAL and DAL breaking out.

ENERGY strong but extended.

Big report over 3 day weekend. Be well!

WHAT’S WRONG WITH THIS NEWS?

SOURCE: https://www.bloomberg.com/news/articles/2018-01-11/wal-mart-raises-u-s-hourly-wage-to-11-in-wake-of-tax-overhaul

PRE-MARKET

Yesterday’s bear market lasted 3 hours. Need we say more.

Futures are up.

Now watching Biotech. IBB in big base.

No other changes.

Many are talking about higher rates. We have news for them. We are still sitting down at 2.56% on the 10 year and 2.91 on the 30 year.  Relax! That said, we will be watching.

And KODAK (KODK) announces a coin. They did not announce something that matters. Stock goes from $3 to over $13. We repeat, in nonsensical moves like this, just don’t be the last one in.

PRE MARKET AND SOME NOTES

A few thoughts in and out of the market:

Immigration:

Not one person will be deported out of DACA. Not one.

The coins:

Kodak (KODK) announces a coin. Goes from $3.10 to $6.80 yesterday. Trading at $11.50 this morning. But there is no bubble!

Notice many of the other “questionable” blockchain/coin stocks have been slaughtered. Do not be the last one in.

Trump:

That was one hell of a one hour meeting in front of the cameras yesterday. That was Trump telling all the famed psychiatrists like Dr Mika and Dr Joe that everything is fine. As always, you decide.

Tax bill:

More and more bonuses. More and more wage hikes. More and more investments. While, as we wrote yesterday, a company like Tim Hortons takes away because of mandated higher wages by government. Repercussions!

The markets:

Continue to watch COMMODITIES. Energy, oils, steel, copper, aluminum, palladium…all continue to soar. Gold and silver also getting a bid. Energy prices are at 2 year highs. We have been told the ultimate outcome of all the central bank nonsense of printing of trillions, negative rates and 0% rates for 8 years has to be a good bout of inflation. Has not happened yet but always keeping one eye out as we do not believe economics 101 is dead…regardless of central bank interference.

Watch long rates. On the verge of breaking out of near-term range. If successful, watch 10 year head towards 3%…the highs going back to 2014.

Sentiment and complacency remain at extreme levels while major indices are at extreme extended levels. Just saying! Also, just saying…we will get a correction eventually. No really.

POLICY HAS REPERCUSSIONS

By Gary Kaltbaum

In a nutshell, in one glance, we are able to see the rewards of good policy and the repercussions of bad policy.

I was doing my usual scanning of the news and right about the same time, I found two reports with two different outcomes. Those that have listened to the radio show or watched me on tv, know I have been preaching pro-growth policies forever. These policies include lower taxes, less regulations and simply put, getting government out of the way where they shouldn’t be. So:

Tim Horton franchises, owned by children of the founders reduced employee benefits to offset a MANDATED minimum wage hike. Because of these mandated costs to business, employees will have to pay at least half of the health and dental benefits and lose their paid breaks. According to the franchises, the move will help offset Ontario’s $2.40 jump in hourly minimum wage They went on to say that the cutback in benefits and wages at their two locations, which came into effect Jan. 1, follow the rise in Ontario’s minimum wage from $11.60 an hour to $14 this week. They also wrote that the changes come in anticipation of another $1 bump at the start of 2019. The owners also pointed to “the lack of assistance and financial help from our head office and government” in the letter and said their decision follows “intense discussions with management and numerous small business owners in the area and other franchise owners.”

Around the same time I read about this, I found this:

Visa said it is raising its match on employees’ 401 (k) contributions in response to tax reform. The company said it will increase its contribution to 10% of base salary. “Tax reform in the United States will strengthen Visa’s competitive position globally and create new opportunities for Visa to invest in our business,” the company said in a statement. “With the additional 401(k) match, Visa’s U.S. employees will enjoy a sustained benefit, consistent with the role they will play in building our business.” The company said it will increase its 401(k) contribution to 10 percent of base salary. In other words, an employee who earns $100,000 a year can set aside $5,000 and the company will contribute $10,000. Visa’s longstanding policy has been to contribute $2 for every $1 an employee contributes. Employees can now contribute up to 5 percent of base pay, up from 3 percent.

So one government dictates, mandates, forces companies to pay something that maybe they are not ready to pay. What do they do? Like any smart businesses, they react.  They usually let go of people, drop hours, drop benefits, raise prices and in some cases, move further into technology to cut amount of employees.

The other does the opposite. It lowers the burden. It lowers the business’ cost. It unleashes more profits. What happens? What do they do? They give back. They give back to employees. They expand. They invest. They grow.

It was and wasn’t amazing to see these two news items side by side. You would think the “socialist” side would recognize but solidifying power is more important than recognizing what really drives the economy. It is the millions of workers that work their asses off every day to better for themselves and their family…not the bureaucracy.