Over the past several days, the market has been hanging on every miniscule ebb and flow news byte out of the White House and Capitol Hill about the fate of the Republican healthcare bill.
Does the House leadership have the votes to pass the bill? Will the more conservative members of the House, i.e. the Freedom Caucus, get some concessions from the White House on certain provisions to put in the bill?
The reason why markets are so concerned here is because if the healthcare bill can clear the first hurdle in the House of Representatives, it can then go to the Senate for revision.
If it can make it through there, then the bill will have a good chance of actually becoming law.
Now, I am not going to argue the merits of the bill today. There are some things to like about it, and a lot more to dislike.
However, from a purely stock market standpoint, a vote for passage in the House will effectively be seen by Wall Street as a vote of confidence that the pro-growth Trump agenda is still on track.
That vote was supposed to be today, but with about 30 minutes left in Thursday trade, news wires reported that the House was delaying any vote. That news sent markets from positive into negative territory.
It also can be seen as, at the very least, a detour down the track toward the golden destination that is corporate tax reform in 2017, which is what the smart money really cares about.
Anything that puts those tax cuts in jeopardy of being shelved until 2018 or beyond will be extremely negative for equities.
The reason why is obvious, as everyone knows that the chief reason stocks have run up so far, so fast, since Election Day is because of the hope that the pro-growth Trump agenda (i.e. corporate tax cuts) gets through.
So, the fate of the market going forward rests on the upcoming vote in the House on the healthcare bill.
But to get enough votes to pass the bill, there’s been a lot of wrangling and political horse trading between the White House, Congressional leaders and House Freedom Caucus members currently balking on a yes vote.
Hey, that’s how the sausage gets made in Washington.
It’s not pretty, but hopefully it will come out tasting good for the American people … and hopefully, that taste will be palatable to Wall Street.
So, if you’re concerned about the future of healthcare, the future of the Trump agenda … and the future of your money, then keep a close watch on the next few hours, days and weeks on the healthcare process.
I know we’ll be watching it all closely so we can make sense of it all for you.
Given Wall Street is playing the waiting game on healthcare, I thought it would be a good time to feature a couple of your recent comments on one very hot topic we covered in our piece last week titled, “The Government’s ‘Fiscal Gap’ Just Got Ugly.”
That article was based on an interesting op-ed in Investor’s Business Daily, written by Sheila Weinberg.
Weinberg is a CPA. She’s also the founder and CEO of Truth in Accounting, a nonprofit organization that does great research on government financial data.
In her article, Weinberg pointed out one disturbing fact. As she puts it:
While the stock market has recovered from the dark days of 2008, the federal government’s financial health has continued to deteriorate in alarming ways.
The piece went on to detail the “fiscal gap,” and the dangerous growth of entitlement programs such as Social Security and Medicare.
On this issue, Joanna KS writes:
Weinberg’s comments are really frightening. But nobody talks about paying back some of the debt incurred. President Obama continuously doled out benefits 50% was on food stamps. When he increased benefits people loved it. It is not only politicians that kick the can down the road, but also people who scream, “don’t cut my benefits: Social Security and Medicare.” So, people are all intoxicated to “benefits.”
With the political attitude prevalent among our elected representatives, that is, “don’t tell the truth because we won’t get re-elected,” the system will simply, at some time in the near future, collapse. By collapse, I mean that Congress will be forced to enact legislation that will greatly reduce entitlements and increase taxes in a very short period of time. This will be very financially disruptive to millions of older Americans.
Brad response: I agree here with both Joanna and Pete. Until we take these problems seriously, there is very likely going to be a point of major dislocation, especially for those receiving and relying on Social Security and Medicare at that time.
The only way to avoid this, other than the luck of timing, is to make sure you’re financially ready to thrive independent of these programs.
And getting you financially fit for that possibility is what Uncommon Wisdom Daily is all about.
Mining for Money
Gold Bangs Its Head
By Sean Brodrick
Gold is fast approaching a “break out or fake out” moment. The big money is likely laying even bigger bets. And the volatility in the next week could be enormous!
What do I mean by that? Check out this chart of the SPRD Gold Trust (NYSE: GLD), the world’s biggest physical gold ETF. It tracks the price of gold very closely.
You can see gold’s shorter-term uptrend. You can also see a downtrend that started in August of last year.
Gold and the GLD are banging up against that downtrend right now. That has caused gold to pause and pull back a bit.
Naturally, today’s pullback in metal is multiplied in gold miners. Traders have racked up a sweet week of gains. Now they’re ringing the cash register and running for the exits.
That kind of short-term thinking isn’t the way to play this. Gold requires a long game.
The next few days should tell us whether gold is really breaking out. Or, if it’s a fake out, and gold has to go back and test its uptrend again.
This morning, in my article “Getting Religion on Gold,” I told you about long- and shorter-term forces that are lining up to drive the gold price higher.
But in the very short term, Washington politics could be key, as entrenched powers fight over health care, taxes and more.
This is edge-of-your-seat stuff. We could see huge swings in either direction. And while I strongly believe the big trend is higher, a short-term pullback wouldn’t be surprising. Heck, this market is so volatile, they should rename gold, “dynamite”!
You don’t have to buy anything ahead of the next big break — there will be plenty of time to hop aboard gold’s next big bull run.
But if you’re the type who looks for sweet entry points, a politics-related pullback could be just what you’re waiting for.
I want to know what you think, so if you have a comment or question about today’s Afternoon Edition topic, or any of the topics we cover, let me know. All you have to do is leave me a comment on our website or send me an e-mail.
Good luck and happy investing,
Uncommon Wisdom Daily