It was another day of market records with a couple of surprising names finally joining the all-time high party on Tuesday.

After a cautious start, pausing for Yellen, the rally went back to autopilot.  For many, that’s a frightening thought; for others, the fact that the S&P 500 hasn’t corrected more than 1% during any of the past 46 sessions is also a red flag. The fact is that only curmudgeons and bears are throwing that kind of shade.

This rallying is based on positive assumptions built around a pro-business president and the GOP’s control of the House and the Senate.  There is no doubt that established Republicans have squandered opportunities, but there are now concerns about debt and tax policies; they aren’t crazy enough to get in the way of prosperity. 

Joining The Party

Yesterday’s session saw Goldman Sachs (GS) finally climb to a fresh all-time close for the first time since September 2007.  Financials were the best performing S&P sector; biotechnology was even hotter as the IBB Index rallied almost 3%, and broke through a long-term downtrend, signaling a potentially bigger move higher. 

Retailers:  Blue-Light Dilemma

Today, it’s all about those brick-and-mortar retailers that have been battling for their very existence. They now face the prospects of a dagger via a border-adjustment tax. A group of retail CEOs will meet with President Trump at the White House to discuss taxes, business conditions, and survival.  Their pitch will be simple:

• Americana – Most of them operate in every state (a few in 49), and have histories that go back as far as 100 years.

• Workers/Jobs- These companies employ hundreds of thousands of workers, forcing them into massive layoffs. It goes against everything President Trump promised.
• Affordability – These companies sell the clothes that workers in the heartland will need as they return to factory jobs.

There will be a lot of individual stories and pitches, including Walgreens, reminding the White House they could have moved their headquarters to Switzerland after the merger with Alliance Boots, but it instead stayed in Deerfield, Illinois.

Meanwhile, it takes a lot of chutzpah for big exporters, such as General Electric (GE) and Boeing (BA) to push for a border-adjustment tax, considering all the breaks they receive such as corporate welfare via the Import – Export Bank. 

In addition, most of these retailers pay an effective tax rate north of 30% which means limited returns for investors.  On the other hand, in the most recent quarter, Boeing paid an effect tax rate of 12.0%; and  GE had earnings before income tax of $2.89 billion, then a ‘benefit’ rather than tax of $766 million that brought its net income to $3.66 billion.

At this point, the scenario has become akin to David and Goliath, and I think there is a chance for everyone to succeed. 

Today’s Session

Retail sales surged in January underscoring my assessment that rocketing sentiment is materializing into reality. Excluding autos, January retail sales surged 0.8% with nice month and yearly improvements for restaurants, clothing and gas stations.

These beaten down niches, along with sporting goods and electronics, are going to have me looking closer at potentially buying gun and ammo stocks as well as apparel retailers.

Today is day two for Yellen on Capitol Hill, and while PPI and now retail sales have come in stronger than anticipated, it probably doesn’t move the needle at the Fed; although, her comments will give everyone something and everyone nothing.