In the news business, some weeks are downright slow while others burst at the proverbial seams with breaking headlines.
This week was the latter. You couldn’t turn away from your computer without seemingly missing some important breaking news capable of affecting your money.
There were two major news events this week. One was last night’s U.S. missile strikes against Syria, a move seen as a punitive response to the Assad government’s recent chemical weapons attack on civilians.
The Assad move was widely viewed as a test of President Trump. One that would give us a chance see how, precisely, the new Commander-in-Chief would respond to a provocative incident.
Well, even if you don’t agree with the actions taken by the president Thursday night, you do have to conclude that the action was swift, decisive and rather unambiguous in its message.
There are still a lot of questions that need to be raised about what happens next. But Mr. Trump’s sharp-yet-measured response has put the global community on notice.
Now, normally, we would expect heightened geopolitical risk to cause some reactive selling in markets. And that happened, to some extent, in Thursday’s session.
Remember, markets traded higher for most of yesterday’s session. However, when word hit that a military response in Syria was imminent, it caused a pullback that left stocks well off session highs.
By Friday morning, markets had largely put the Syrian strikes on the shelf. Traders shifted their focus to what was supposed to be the biggest market-moving news of the week … the March employment report.
While most on Wall Street were expecting job growth during the month to come in around the 175,000 range, the actual data had a different idea.
The Labor Department said new nonfarm payrolls grew by just 98,000 in March. That’s well-below the 200,000-plus jobs added in February and January.
This number was a bit too cold for comfort. Meaning, the data failed to support the thesis that the economy continues to improve at a sufficient pace to justify relatively high stock valuations.
Moreover, the disappointing jobs report should put somewhat of a damper on the recent positive sentiment readings we’ve seen of late.
Metrics such as Pew polls, earnings expectations and other sentiment indicators such as consumer confidence all are calling for blue skies ahead. However, the actual data we keep receiving has plenty of rain clouds.
Still, the hope rally remains largely intact. Yet how much longer can we go without seeing the numbers buttress the sentiment?
First-quarter earnings season starts soon, and in my view, the numbers better be pretty darned good.
If they’re not, then we could be in for a lot of disappointment in the major averages in Q2.
There were two other big news items that took place this week with implications for money and markets.
President Trump’s meeting with Chinese President Xi Jinping could be the first move toward a new policy with the Asian superpower. Yet White House officials have tempered expectations here, saying the meeting was mainly to "set the relationship, set the tone," for the next four years.
Finally, on Friday, the Senate voted to confirm Judge Neil Gorsuch to the Supreme Court. This is important, because the Senate did so via the so-called "nuclear option." This essentially destroys the filibuster rule requiring a 60-vote majority to confirm nominees to the highest court.
The reason this is important is because now the rules of the Senate really don’t exist. And the next step is to kill the filibuster rule for legislation (which is still in place).
If the Senate can basically change its own rules on a whim, then it has no rules. And that means the country’s lawmaking apparatus is basically broken.
More importantly, major legislation now is subject to the whim of a single-vote majority. That’s not good for legal stability … especially when it comes to legislating major policies (healthcare, taxes, etc.) that affect us all.
What do you think about this wild week of news? Do you approve of the president’s Syria action? What about the jobs data, earnings season and the Senate’s caprice? 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, just leave me a comment on our website or send me an e-mail.
Good luck and happy investing,
Uncommon Wisdom Daily