Two Steps Forward, One Step Back – Maybe taxes aren’t so bad after all? Well, of course they are, nobody WANTS to pay more. But if you didn’t know hikes were coming post November 3rd AND after printing trillions to stimulate the economy, then you haven’t paying attention. Sentiment still feels optimistic, bordering on complacent, and with valuations so stretched, it can leave the market vulnerable and fragile, hence those little shakeouts. But yesterday’s news feels a lot older than that and the main indices are on precipice of making new ATHs. And why? Because earnings have on balance been great, economic data remains red hot and those tax rates that flashed on the TV yesterday simply aren’t going to happen. The lone sector in the red is Household Goods and you can point your finger squarely at Kimberly-Clark as the hoarding of toilet paper dissipates. Bank/autos names are at the top of the gainers but growth doing better broadly speaking. Semis would be doing even better were it not for Intel (shame on you), where increased costs and some weakness in their data centers. And whereas bonds didn’t gain yesterday during equities sell-off yesterday, they are in fact lower on stocks resurgence today. Breadth remains good for the S&P but there has been some leakage from the Nasdaq and Russell 2k – you must keep your eye on this.
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