Investment Commentary –December 19th, 2017

Market Indices as of Market Close December 19th, 2017
Dow 24,754 (25.26% YTD)
S&P 2,681 (19.77% YTD)
NASDAQ 6,963 (29.36% YTD)
Global DOW 3,067 (21.22% YTD)
Gold $1,264 (6.63%)
OIL $57.49 (0.88%)
US 10Y Treasury 2.466 (-2.10%)
Barclay Bond Aggregate (3.47% YTD)

Republican tax bill heading back to House with final passage expected Wednesday

The Republican tax bill will head back to the House of Representatives for a vote Wednesday after hitting a procedural glitch over minor provisions that broke Senate budget rules.

The House passed the bill Tuesday afternoon, sending the sweeping measure to the Senate for a vote and delivering on a major policy goal sought by President Donald Trump and the congressional GOP.

But late in the day, the Senate’s parliamentarian said three provisions in the massive bill would violate what’s known the Byrd Rule. Those include allowing families to use 529 plans for home-schooling expenses. Running afoul of those rules means the House must vote again after the Senate votes on an amended plan. The Senate is likely to strike the provisions. Senate Majority Leader Mitch McConnell said a vote is planned for Tuesday evening.

Analysts predict the measure will pass the Senate even if ailing Arizona Republican John McCain misses the vote, as expected.

The House’s vote was 227-203, with a handful of Republicans voting against the bill in protest of a $10,000 cap on state and local tax deductions. No Democrats voted for the bill, which, among its many features, cuts the corporate tax rate to 21% from 35%; temporarily lowers individual rates; and doubles the child tax credit to $2,000.

News around the web:

Another raise

As expected, the Federal Reserve lifted interest rates for the third time this year, and it signaled that it expects to maintain its course of slowly raising rates throughout 2018 amid a leadership transition at the Fed.

Europe stays the course

The European Central Bank lifted its forecast for economic growth but kept its benchmark interest rate and its bond-buying stimulus program unchanged. The program is expected to remain in place through September 2018.

Growth projections

The Fed also lifted its economic growth projection for next year to 2.5% amid expectations that Congress will approve tax cuts. However, the Fed doesn’t expect that the tax overhaul will lift the economy’s long-term growth rate, as it left that projection unchanged at 1.8%.

On tap this week:


Third-quarter GDP, third estimate, U.S. Bureau of Economic Analysis
The Conference Board Leading Economic Index for the U.S.


Durable goods orders, U.S. Census Bureau
University of Michigan Index of Consumer Sentiment
Personal income and consumer spending, U.S. Bureau of Economic Analysis


This past weeks leaders were Technology, Services and Consumer Goods. Laggards were Financials and Utilities.

This day in financial history: December 19, 1979

Merry Christmas Chrysler
After $200 million second quarter losses Chrysler gets an early Christmas present when the Senate Okays a $1.5 million loan.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.