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Morning Commentary

Driverless Cars Are Easy….Healthcare?  Not So Much!

By Charles Payne, CEO & Principal Analyst
3/14/2017 7:10 AM
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It was the kind of session one might expect the day after a massive snow storm that shut down New York City. Instead, it was calm and mostly boring on Monday as Wall Street waited on a slew of events while Main Street waited for another reason to cheer when spring finally arrives. 

The lone bright spot was technology, which cheered the $15.3 billion acquisition of Mobileye (MBLY) by Intel (INTC).  This is a deal I strongly felt would eventually happen (see below), and one that sparked excitement about the next big waves in technology:

On that note, Citrix (CTRX) popped on news of a potential bid right before the close, and Ambarella (AMBA) was strong throughout the session.

An interesting note: Intel has $31.0 billion in cash and cash equivalents offshore, of which the company will use half to purchase Mobileye.  With the Trump Administration dangling a big break in repatriation taxes, Intel decided to stay relevant; I also wonder if management is hinting that it will take too long to get breaks on profits earned overseas.

This is critical because the Congressional Budget Office (CBO) finally scored the Republican replacement for Obamacare. The GOP headlines include:

The mainstream media will focus on the following:

Thus far, I am not sure if the CBO score and sales job are enough to sway conservatives focused on a true “repeal and replace.”

However, I think the Street will watch, but they will not rubberneck this as more economic data will be released today.

Today’s Session

The market looks to open lower, mostly a cautious move by the market as the FOMC gathering kicks off today.  The Fed is going to hike rates so I don’t think this is the problem but instead sentiment expressed with the release of the NFIB Small Business Optimism Index gets to the heart of growing angst.   The headline of 105.3 came in better than expected as post-election optimism holds, but for how long?

Telling comments from NFIB underscore what a lot of market professionals are feeling.

“It is clear from our data that optimism skyrocketed after the election because small business owners anticipated a change in policy,” said NFIB President and CEO Juanita Duggan. “The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November. If the health care and tax policy discussions continue without action, optimism will fade.”

I’m not sure about the current Obamacare replacement plan but think Republicans will get something through that might remove the issue with respect to markets although I am not sure how revolutionary it will be.

I’m not forcing the issue this morning but I’m at work in NYC Blizzard 2017 and looking to pull the trigger with the right signals.  Our buy list is longer than it’s been in a few weeks so it’s not ideal.   I still think the Fed rate hike could be the catalyst for the next leg higher.

 


 

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