Monday was a lackluster session from the very start, but initial weakness opened the door for buyers to make their move. NASDAQ spurted to record highs, and the Dow came close to reversing into the plus column when word came out that the GOP might phase-in corporate tax cuts.

S&P 500	Dow	NASDAQ	Russell 2000	Crude	Gold
-8.24	-85.45	-2.13	-17.42	+$0.22	+$5.60

I would say, although the market held up well after the scuttlebutt of a five-year phase-in of tax cuts, the action in the Russell 2000 handicaps Wall Street’s concern that the GOP could blow this amazing moment in time.  Everyone would lose, but it’s those domestic-oriented companies on the Russell 2000 that would lose the most.

When the tax cut news broke, it flipped the script, and any hopes of a rally into the close were dashed.  The session wasn’t a complete disaster, but heightened anxiety could roil the market, especially going into the tax plan on Wednesday and the jobs report on Friday.

I will say, however, even though major indices were only down fractionally, the breadth was more bearish with almost 2,000 losers on NASDAQ versus less than 1,000 winners.  Investors are determined to ride the winners, including Facebook (FB) and Apple (AAPL), which will report Wednesday and Thursday, respectively.

Tech results generally have been magnificent according to FactSet data, convincingly crushing Wall Street consensus:

• 42% Semiconductors
• 12% Software
• 12% IT
• 10% Internet

Quiet Gusher

Don’t look now, but crude has broken out, and now there is a small chorus calling for $60.00 for crude by the end of the year. My number was $55.00, and West Texas Intermediate (WTI) is right on the cusp.  This is a significant resistance level that goes back many years. 

Our oil positions are against us, but this might be the moment to add or create fresher positions. 

The wide gulf in spending and income suggests consumers must be digging in their piggy banks or maxing credit cards, or both.  In this case, it was savings that took a hit, plunging five percentage points to 3.1% from 3.6%.

This is a double-edged sword of sorts; on the one hand, we don’t want consumers hoarding money. The reason why we are pushing tax cuts so hard is that people will pocket more of their hard-earned cash and put more to work. On the other hand, it doesn’t have to be blind consumerism; we just want you to put it into society. 

Many worry about savings dipping to such low levels. The bottom line is that we will never be a nation of digit- savings rates, which is another reason why Congress better not mess with our 401K plans.

Today’s Session

Equity futures are slightly higher but tenses are palpable. GOP leadership is grasping at straws about the tax plan promised tomorrow, and then there’s the jobs report which always brings its own basket of worries and concerns. 

I think we can kiss state and local tax deductions goodbye, which doesn’t make me happy as someone who lives in a highly taxed blue state.  But the fact is the party boxed itself in, it has too few supply side advocates and keeps blinking at progressive points that were rejected by the American public. 

It’s a better idea than harming 401Ks or border adjustment tax; however, it’s a cop-out for sure and gets other tax cuts, including corporate into play, which indeed helps all Americans.

We are not forcing the issue this morning.

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