December 1, 2017

What, me worry? (said the market)

On Friday, the S&P 500 ended the day down 0.2%. But at one point in the day it was very briefly down 1.5% probably due to Flynn’s guilty plea. Toronto also ended the day down 0.2%.

Linamar was down 3.0% and Dollarama was down 2.2%. Stantec was down 1.6%, Visa was down 1.7%, Toll Brothers was down 1.3%.

The Canadian dollar surged 1.8% after Statistics Canada reported (actually estimated) that the Canadian economy added (a statistically estimated) 80,000 jobs in November and that the national unemployment rate fell sharply to 5.9% from 6.3%. (Take that, doomers!)

The U.S. stock markets largely shrugged off Michael Flynn’s guilty plea and the implications thereof and continued to focus on the Senate passing the income tax reduction bill. That bill looked set to pass the Senate Friday evening but there would be a next step where the House and Senate bills have to be reconciled and (I believe) the reconciled version passed by both the House and Senate.

Perhaps by Monday the market will be focusing on the implications of Flynn’s plea and who he has now (quite rightly) tattled on. I tend to think this is truly the beginning of the end for Trump. At very least there would seem to be justification for charges of obstruction of justice in regards to Trump’s efforts to halt the investigation of Flynn. And despite the gravity of the situation, I think the Special Prosecutor would proceed because: 1. It is his job and 2. He would likely (wrongly or rightly) view it as doing a huge favor to America and the world. Any charging, impeachment or resignation of Trump is going to be a scary time. I would expect his supporters to riot in the streets – and for him to encourage that.

I did go ahead and sell half of my relatively small American Express and Costco positions this morning. I also then sold what amounted to just over half of my relatively small remaining position in Bank of America. All of these sales were in registered accounts where I don’t have to worry about paying tax or even reporting the transaction.