It was just one of those days on Wednesday. The market couldn’t get it in gear and yet, the Dow Jones Industrial Average, buoyed by DuPont (DD), climbed to yet another all-time high.  A part of the anxiety came from anticipation from the Fed minutes of the recent Federal Open Market Committee (FOMC) gathering that could lend credence to the March meeting being “live”.

While the line, “It might be appropriate to raise the federal funds rate again fairly soon,” grabbed headlines, it didn’t go far enough to really put March into play.  There was also a discussion of overshooting on employment and inflation objectives. That’s silly ivory tower talk as the nation has a long way to go to overshoot on jobs, and it admits to having ‘ample time’ to respond to inflation:

• Many saw only modest risk inflation pressures that will rise significantly.
• Many Fed policymakers judged that the Fed would have 'ample time' to respond if inflationary pressures emerged.
• Fed officials with a vote on policy agreed that even with uncertainty over government policies, near-term risks to the economy is roughly balanced.
• Fed officials with and without a vote on policy saw an increasing upside to the economy, given the possibility of an expansionary fiscal policy.
• Among Fed officials with and without a vote on policy, several saw downside economic risks associated with the potential appreciation of the dollar.

The Fed continues to point to uncertainty with government policies and their near-term impact on the economy.  I am not sure what those could be, but the nearest dot to connect would be a border-- adjustment tax and/ or heightened trade skirmishes.

I still think that the market and most political observers think tough talk will yield enough compromise that more draconian measures will not be necessary on trade. I think/hope that the border-adjustment tax is dead on arrival.

King Dollar

 The strong U.S. dollar is a reflection of confidence in the U.S. economy and its performance compared with the rest of the world—and was a “good thing in the long run.

-Treasury Secretary Steven Mnuchin

Moments after the FOMC minutes underscored angst over the strong dollar, Treasury Secretary Steven Mnuchin praised King Dollar.  Of course, President Trump has already talked about the negative impact of the recent rise in the dollar, and it makes for an interesting juxtaposition: complaining about other currencies being too low as the Chinese yuan.

However, I would like to see the dollar come down just a tad, but we do our work in ‘constant currency’ to mitigate the noise of currency fluctuation.  Be that as it may, the drivers of major indices are multinational companies that can see share price pressure from the strong dollar.

Perhaps it’s all a moot point, as all Treasury Secretaries claim they want a strong dollar, after all.

Earnings after the Bell

• (TSLA) Telsa Motors missed on earnings; beat on revenue, but shares are up because the Model 3 Electric Car will start production in July.
• (CTRP) CTRIP.COM INT’L blew away consensus on the top and bottom lines.
• (LB) L Brands had a big beat, but their guidance is well below the Street, and the stock is getting punished in the after-market.
• (JACK) Jack in the Box, which continues the misery from restaurants, missed consensus. The shares are getting jacked in the after-market.

Today’s Session

The market starts the session with cautious optimism as Treasury Secretary Steven Mnuchin made the rounds with the media including Maria Bartiromo on the Fox Business Network.   Mnuchin talked about the market and the dollar as proxies for confidence for President Trump’s policies, but he was less ebullient on the need for King Dollar. 

Its official, the administration will focus on Obamacare first but hopes to have a tax reform agenda in place by August.  He seemed noncommittal to the boarder adjustment tax, but said the budget and policies should be scored in a “dynamic” fashion, which better reflects the positives of supply-side economies and greater velocity of money. 

(This also leads me to believe he was saying we don’t need a draconian tax plan that could crush consumers in effort to make the budget revenue neutral.)   I think the market was pleased with the poise and confidence of the new Treasury Secretary, as equity futures edged higher.  I’m pleased and see greater acceptance that all of the key economic pledges will be met.