Ahead of Thursday, Markets Look Hesitant

Wednesday, June 7th, 2017

With so much hype currently surrounding the Senate Intelligence Committee’s hearing on whether or not the Trump campaign colluded with the Russian government to subvert the U.S. general election last November – climaxing with testimony tomorrow from James Comey, former FBI Director who was summarily fired by President Trump last month – and little else on the earnings or economic docket this week, market participants might be forgiven for looking past certain developments we’ve seen so far.

For instance, President Trump ushered in a proposal regarding $1 trillion in infrastructure spending to rebuild roads and bridges in the U.S. It’s the type of measure that was cut down routinely when former President Obama offered up such a thing, but with innate interest from the Democratic party in that such a proposal would help create jobs for blue-collar workers in this country, it appeared at the outset to be one of the few items that might expect bipartisan support on Capitol Hill.

Not so fast. The headline on Monday following Trump’s unveiling of his new scheme? Privatization of air traffic controllers. The plan to separate this industry – and its 30K employees – to the private sector from the FAA looked to be a money-saver as well as a bureaucracy reliever. But with vehement opposition on the Hill from Democrats regarding privatizing any industry in the interest of squeezing profits, this proposal looks as dead in the water as when congressional Republicans tried it last year when Obama was still president.

Privatizing elements of the Transportation industry has a track record of improving service – such as fewer delays and booking problems – but raising costs. “…Tolls, tolls, tolls…” in the words of Senator Chuck Schumer (D-NY). With such a slim margin in the Senate, not to mention a paltry 36% approval rating, it’s going to be tough for Trump to get a win here, even in a “winnable” venue of infrastructure spending.

Still, it’s better than what’s around the bend for Trump: the Senate hearing on possible ties between Russian hackers and his campaign. Today, NSA Director Mike Rogers testifies as somewhat of an appetizer to tomorrow’s Comey appearance on the floor. Should there be the type of high-octane news headlines generated from these testimonies that left-leaning publications might expect, we might see a different tone affect market trading through the end of this week. Then again, we might not – and this could spark a relief rally.

The SP 500, Dow and Nasdaq all show futures marginally in the green this morning. It’s been a down week for trading overall, but this follows all-time highs from late last week, so some profit-taking is to be expected. Events tomorrow – not only Comey’s testimony, but an ECB decision on financial policy and a general election in the U.K. – are what traders will most likely be keeping an eye on, and volume will probably be on the low side today.

Mark Vickery
Senior Editor

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