Tuesday, February 21, 2017
Ahead of the bell in this Presidents Day-shortened week, 16 major U.S. CEOs - including from companies in machinery and defense, such as Caterpillar CAT , Boeing BA and United Technologies UTX - have drawn up a statement for lawmakers on Capitol Hill strongly endorsing tax reform, which President Trump carried as a main campaign issue on his way to his electoral victory last November. In the statement, the business leaders "applaud [Congress'] efforts to pursue tax reform that is both big and bold."
Pre-market activity is once again strong, following Friday's break into positive territory after a mild early morning sell-off. Keeping the bull market in place - aside from strength in quarterly earnings reports from major retailers like Walmart WMT , which reported its best quarter in four years, and Home Depot HD , which easily beat year-over-year comps - looks to be this promise of "big and bold" tax reform. In fact, it's arguably the largest single factor in the overall strength in the Trump Rally, which has so far amounted to 4% gains since the election.
We saw markets flatline a bit when other "big and bold" strategies from the fledgling administration, be they related to immigration bans or controversial cabinet picks, took much of the wind out of the sails. This was especially true as tax reform rhetoric was largely absent from recent news cycles in favor of arguably more trite and/or personal issues from the president's Twitter feed.
But the table appears to be re-set with today's notice from the country's top global manufacturers. The executives even joined to support Trump's border adjustment tax reform, which has been considered controversial in some circles as it lowers tax burdens on U.S. exports while raising them on imports. The 16 individuals, it has been reported this morning by CNBC Business News reporter Ylan Mui, have joined under the moniker "American Made Coalition," and this letter - which pushes back against the group of retailers last week who oppose the emerging tax reform agenda - is reportedly just the first step in a much larger campaign.
So far, so good - at least as far as the rally goes. The S&P 500 is +5.75, the Dow +74 and the Nasdaq +9.5 points directly ahead of today's market open.
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