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Morning Commentary

Dow Dives on Goldman Downgrades
By Charles Payne, CEO & Principal Analyst
1/10/2017 9:30 AM

Question of the Week

Great news from the National Federation of Independent Businesses (NFIB) as the optimism reading leaped to the highest level since 2004.

Are you feeling more optimistic? And, if you are a business owner looking to hire, is it difficult to find qualified candidates?

Post your answer below.

Once again, Dow 20,000 remained out of reach as the index began the session on Monday with two big names, Coca-Cola (KO) and Procter & Gamble (PG), getting a “Sell” rating from Goldman Sachs (GS).  While blue chips struggled, the NASDAQ rallied for the fifth consecutive session, closing at an all-time high.  Initially, tech names struggled during the post-election period, but have come on strong. Biotechnology has been the real star.

The Biotechnology Index has climbed more than seven percent in the past week. I have been saying all along that it has the potential to rally a lot higher on demand, FDA news, and acquisitions. 

As for the big board, the absence of big-time financial data and corporate earnings means that it might take upgrades to nudge it past 20,000. 

As for all the other indices, this is also part of profit-taking that I have mentioned that was delayed because of taxes and a dollop of anxiety. 

The Business of America is Business

 After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world. I am strongly of the opinion that the great majority of people will always find these the moving impulses of our life.

-Calvin Coolidge

It’s unlikely “Silent Cal” would have been active on Twitter, but President Coolidge carried on the focus of business and growing America from his predecessor Harding, resulting in the roaring 20s.  (I know cynics will point to how the Roaring 20s ended, but those mistakes don’t have to be made.  Meanwhile, the kind of groundswell that gets an entire nation on board is bubbling in America, and others around the world are taking notice.)

The Trump Tower lobby continues to be the place to be seen, especially if you are a mover and shaker.  Yesterday saw Jack Ma and Bernard Arnault, perhaps the richest man in China and in France, make the trek, respectively.

They joined Masayoshi Son, the second richest man in Japan, and Carlos Slim, the richest man in Mexico; they have already made the move to see the President-elect.

  • $21 billion: Ma
  • $12 billion: Son
  • $34 billion: Arnault
  • $49 billion: Slim

               $142.0 billion Total

These billionaires are de facto business ambassadors for their respective countries.  Another critical point to understand is that they all built their business empires, and have a first-hand understanding of risk-taking and success that only a few in the world understand. 

For all the concerns about a trade war, we have Son pledging to invest in the U.S. and to create 50,000 jobs.  Ma is talking about helping with the creation of 1 million jobs in the heartland of the United States as well, along with Arnault who hinted at opening a factory in North Carolina. 

While much has been made of the pros and cons about Trump’s cabinet, there is a distinct difference between movers and shakers that create jobs and empires from politicians.  Today begins the confirmation period for Trump’s cabinet appointees, and Democrats are said to be most focused on businessmen and Senator Jeff Sessions.

It’s political posturing, which is too bad when real job creation is happening and the new team hasn’t taken office yet.

Today’s Session

Houston…we have liftoff!

Great news from the National Federation of Independent Businesses (NFIB) as its optimism reading has leaped to the highest level since 2004. Highlights include:

  • Expect economy to improve +38 to 50%
  • Expect real sales higher +20 to 31%
  • Good time to expand +12 to 23%

The sore spots remain in employment were only 16% plan to increase hiring, although part of the problem is the skills shortage.  In the survey, 44% reported few or no qualified applicants for positions they are trying to fill.

Investors have accepted everyone feels better so most are just trying to see signs of actualization.  That requires a longer timeline, but I don’t think the market will be unreasonable.  We have confirmation hearings this week, and of course, the transition of power and the initial days/weeks of the new administration.

Let’s see this market shake out a bit this morning. 

 

 

 

 

 

 

 


Comments
CAR NANNY operates car washes in large downtown parking garages. Our clients tend to be the 1%'s and our pricing and overhead structure allows us to pay above average wages. If one can get someone close to or above $15/hr, quality labor is available. We cannot find quality candidates at $10/hr. I am optomistic and more specifically, excited, about a business friendly administration. Animal instincts abound.

Charlie Daniel, CEO/Founder CAR NANNY on 1/10/2017 9:51:43 AM
The market is shaking the dust off its feet and getting ready to roll! The failed policy of regulatory overreach which has been like trying to live through death by a thousand cuts.Regulations will be pulled back and everyone will breath more easily. Even the liberal nanny state capitalism is evil micro managers are excited about the growth potential that will result from the change though they are loathe to admit it lol!

Ray Weldon on 1/10/2017 9:55:57 AM
"44% reported few or no qualified applicants for positions they are trying to fill"
I'd like to know what positions they can't fill, especially considering the real unemployment rate and the record number of people out of the workforce.

Dale on 1/10/2017 9:23:41 PM
 

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