Investors will start to read the tax reform bill passed since nobody actually read it (where have we heard this before?) to see what industries may potentially benefit even more. On the economic front, we have ISM Non-Manufacturing PMI, the Unemployment Rate, Non-Farm Payrolls and Average Hourly Earnings.
Get Ready for a Stock Buyback and Dividend Bonanza Next Year: Next year, with Congress about to pass significant tax reform to make it more simplistic (ha-ha just as complicated) and to profit more, don’t expect wages to go up or investment in jobs. But definitely expect a stock buyback and dividend increase bonanza. When companies have their earnings calls after either 4Q or 1Q, we will likely hear announcements about either one or a combination of both, and not wage increase pressures. So in the short term, we will continue to see the broader markets go higher while higher taxed US companies should see significant upside in the near future.
Non-Farm Payrolls & Unemployment Rate: Non-Farm Payrolls, the Unemployment Rate and Average Hourly Earnings for November are scheduled to be released this Friday (12/8). Should the figure show that the economy created more jobs than expected, or if average hourly earnings jumped higher, we will likely see the markets go higher, the US Dollar go higher and oil go lower. Should these numbers disappoint, the markets will likely go lower along with the US Dollar. In September, likely cause of the Hurricanes leisure and hospitality jobs aka waiters and bartenders was negative for the first time since the recovery started back in July. That was the only month that witnessed average hourly earnings soar. So unless, we see a decrease in low paying waiters and bartenders decline, we can expect another disappointing number.
Lots and Lots of PMI readings: PMI readings from across the globe are due out this week. Traders will watch these readings as potential weak readings could cause central banks to take further steps to stimulate their respective nation’s economies.
Flynn and Trump (Finkle & Einhorn): This past Friday (12/1) once the news hit that Michael Flynn would testify that he was directed to make contact with the Russians, the Dow fell 300 points. Expect this week for the the markets to recover on this news as ABC redacted the story after the market closed since it said he communicated with the Russians in the transition period to work to combat ISIS (a change from the previous administration since they initially armed ISIS). Investors will continue to monitor the soap opera to see if any additional shoes are to drop. If any do, such as Jared Kushner or others, expect the markets to fall again.