January 22, 2018

Stocks opened modestly higher this morning (Dow -18 pts; SPX +.2%; Nasdaq +.4%). Utilities and telecom are up around 1%, reversing the recent trend. Energy stocks are also up close 1% as oil heads higher. Industrials and materials, on the other hand, are in the red. The VIX Index is hovering around 11.2 after recently spiking above 12. VIX February futures are trading at 11.8. The dollar is weaker today—perhaps due to the limited government shutdown—and commodities are mixed. WTI crude oil is up around $64/barrel. Bonds are slightly higher in price, lower in yield. The 5- and 10-year Treasury yields are trading at 2.43% and 2.63%, respectively.

Halliburton (HAL) reported strong fourth quarter results that exceeded expectations. Revenue surged 48% y/y. Management believes profit margins will finally return to normal levels in North America this year. That’s because oil drilling activity in the region is accelerating. HAL’s North American revenue surged 89%. The stock is up 3.7% today.

This is day 3 of the federal government’s limited shutdown. Leading Democrats in congress are still insisting that they will only support a temporary funding bill if it includes funding for the DACA program. DACA protects illegal immigrants from deportation if they arrived in the us as children. Republicans, led by President Trump, have thus far refused. The US Senate is scheduled to vote on a new temporary funding bill today. Jim Cramer, CNBC Contributor, said today he believes investors are mostly ignoring the shutdown and view Washington politics as “comedy.” He contrasted the business arena with the political arena. “Our world works. CEOs work.” He implied that Washington doesn’t function. 
 


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