Thoughts {04.25.17}

The market was up big yesterday.  A combination of relief over the French elections and better than expected earnings here in the US.  Earnings continue to come in nicely for the first quarter and economic growth seems to be expanding.  If both of these continue then it is possible that earnings estimates will be going up.  That would make the stock market look a bit less expensive.  That is unless we just rally through the numbers.  I mean if earnings go up another 3-5% but stocks go up by 10% then all you've done is make stocks maybe even more expensive, jus ton higher estimates.

US economic and job growth is impressive given the stealth depression we are seeing in retail.  Companies like Amazon* are killing the retail business as we know it.  Nearly 90,000 retail jobs have been lost since last October.  Expect more of this as Americans increasingly prefer to buy goods off their computers or phones than going to the mall.  

Then again people seem to prefer experiences to things these days.  That trip to the ball game or the vineyard seems more in tune with modern thinking on how to spend discretionary income than buying that 3rd pair of designer jeans.

If you have a retirement plan go read over at the Wall Street Journal's blog "Grab Your Pitchforks, America, Your 401{K} May Need Defending From Congress".   The article refers to considerations in Congress to tax contributions to 401{k} plans, effectively eliminating some of the main benefits of using them.  Look I think this will be a political non-starter.  In a country where the average American has not anything like the amount of money saved to have some sort of retirement it is hard for me to fathom that we'ed implement policies that further reduce incentives for us to save money for the day when we say goodbye to our jobs.  Yet, you should know I was at a meeting with some very smart accountants  right after President Trump took office and they were talking even then about this possibility so expect to see more on this subject as tax reform takes shape.  {WSJ article is behind a paywall but you can probably find it or links to it somewhere on the web if you look.}

*Amazon is a component of several ETFs we own for clients and in personal accounts.