Congress came to an agreement over a short-term spending bill, ending a three-day vacation for the Federal Government. The markets responded by rising to all-time highs, putting last week’s intraday negative turnaround in the rearview mirror. As I hypothesized that was all due to fear of a government shutdown. Remove the fear and the markets reverted to their bull market conditions.
Of course, John Maynard Keynes, the famous British economist would have loved today’s news. His economic theories are the foundation for fiscal macroeconomic theory which is based on aggregate demand. That sounds like economic babble and it is. However, it can best be boiled down to a simple formula: Gross Domestic Product (GDP) = Consumer Spending ( C ) + Investment in Capital (I) + Government Spending (G) + Net exports (XN). The spending bill yesterday keeps G moving along. The new tax bill grows C and I. An infrastructure bill will further stimulate I. Finally, better trade agreements will help net exports. Higher GDP will equate to more jobs and a rising stock market. It will also result in higher inflation, which is what we have the FOMC around to manage,
Earnings season is in full swing. Netflix (NFLX) reported last evening and traded higher by about 19 points or over 8% in the after-hours market. There are many stocks in our portfolios which report this week and next week. Next week I am going to be travelling out of town, visiting clients. So, I will likely publish again the first full week of February.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long NFLX— although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
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