Morning Market Thoughts

Good morning. The futures are up this morning, which takes us closer to a breakout. Watch Gold. It worked yesterday, and is showing signs of continuing today.

President Trump released his budget blueprint, which is the first budget we’ve had in several years, and I think it’s likely to provide a lift for the following sectors:

Aerospace/Defense: A $54 billion increase in defense spending should bring more money into LMT, RTN, HON, HII, UTX, and NOC, to name a few. Don’t look for dramatic breakouts today. Rather, just track them and look for acceptable entries. Many are already close to their all time highs (for example, four years ago NOC broke out above $70, and is now up at $244. Not bad for a company that doesn’t have “.com” in its name.)

Border Wall: $1.5 billion in 2017, and 2.6 billion in 2018 to build a wall across the souther border of the US. I’m not sure how much this will boost infrastructure companies such as RTN, CX, MLM, VMC, USCR, FLR, and GVA, I think the real trade is to focus on material companies, and construction equipment: I’ll be watching MLM, EXP, CAT, DE, along with steel companies such as U, STLD and NUE.

Lastly, watch Oracle (ORCL). Great earnings numbers, and the stock is up over 8% this morning. It’s always risk to chase a stock like this.

See you in the forum.


Note: The Fed’s 25 bps rate hike is being accepted by the bulls, even though Janet Yellen virtually admitted in her press conference that the “data dependent” Fed is actually depending on data that is little more than a cacophony of chaos. Honestly, it was kind of fun to watch the clip when Kathleen Hays (now at Bloomberg, but used to be the economics expert at CNBC) asked Chair Yellen why the Fed is hiking rates now, even as economic data have actually been deteriorating over the past few months.

The clip is a bit long, but for those who wonder how the Fed makes decisions on things that only impact a small sliver of the universe (it’s limited only to this particular planet), you’ll find the answer enlightening.

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