Driving the Dow Jones today is President Donald Trump's announcement yesterday that Republicans had reached an agreement on the tax reform bill, and it could see a final vote by next week.
Republican leadership has completed a deal on tax reform and will aim to pass the new bill by Christmas Day. The new bill will reportedly contain a corporate interest tax rate ("pass-through rate") of 21%, a top individual tax rate of 37%, and a mortgage interest rate deduction cap on loans worth up to $750,000. Democrats argue the bill gives too much help to wealthy Americans and that it adds roughly $1 trillion to the federal deficit over the next decade. Democrats are also demanding the Senate not vote until Democrat Doug Jones, who recently won a special election in Alabama, joins the Senate in the coming weeks. Republicans are highly unlikely to give in to this demand. President Trump has promised that Americans will see larger paychecks starting in February if the bill is passed by Christmas.
The Federal Reserve raised interest rates on Wednesday but left its rate outlook for the coming years unchanged, even as policymakers projected a short-term jump in U.S. economic growth from Trump's proposed tax cuts. Chair Janet Yellen hosted her final conference as leader of the Fed. While Yellen spoke on the central bank's policy outlook, investors appeared more intrigued by her comments on Bitcoin, which has surged more than 2,000% over the last 12 months. Yellen dismissed the cryptocurrency's impact on the financial system and use as a means of payment. "Bitcoin at this time plays a very small role in the payment system," she said. "It is not a stable source of value, and it does not constitute legal tender. It is a highly speculative asset."
Gold prices are rebounding from multi-month lows as the U.S. dollar firmed. We expect gold to have a strong run in 2018. Mounting geopolitical pressures are combining with the perfect storm of central bank mismanagement around the globe. Money Morning Resource Specialist Peter Krauth recently explained why he's so bullish on gold next year. And we're giving you the best gold stock to buy in 2018.
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While the Fed's decision to raise rates didn't surprise anyone on Wednesday, we could experience a small shock wave out of Europe today. It is now the European Central Bank's turn to announce its policy on interest rates and financial outlook. Investors are wondering when the central bank plans to cut back on its stimulus purchases (the ECB plans to cut them by 505).
Crude oil prices pushed higher on news that U.S. crude inventory levels slid last week. The Energy Information Administration announced that domestic inventory levels declined by 5.1 million barrels last week. It was the fourth straight week of declines. However, increasing U.S. production capped the price upside. The WTI crude oil price today added 0.3%. Brent crude gained 0.4%.
Three Stocks to Watch Today: DIS, FOXA, JPM
Shares of Walt Disney Co. (NYSE: DIS) are on the move after Reuters reported the numbers behind the firm's planned deal to purchase film, television, and international assets from 21st Century Fox Inc. (Nasdaq: FOXA). The deal is valued at a whopping $75 billion.
Following yesterday's rate hike, we want to keep an eye on banking stocks. Even though the Fed increased its benchmark rate by a quarter-percentage point, to a range of 1.25% to 1.5%, it wasn't enough for investors of U.S. financial firms. Investors appear to have anticipated a half-percentage point hike yesterday, as shares of Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM), and Wells Fargo & Co. (NYSE: WFC) all fell by at least 1.3%. Investors were also somewhat disappointed by the news that the Fed doesn't plan to alter its monetary policy plans for 2018.
In earnings news, keep an eye out later today for a report from Oracle Corp. (NYSE: ORCL). The firm is expected to report strong revenue and profits from its continued path into cloud computing. Wall Street expects earnings per share of $0.68 on top of $9.555 billion in revenue. We'll also be looking for an update into the company's progress regarding its partnership with Slack Technologies to integrate its software products into the workplace messaging platform. Oracle will report earnings after the bell Thursday.
Look for additional earnings reports from Adobe Systems Inc. (Nasdaq: ADBE), Costco Wholesale Corp. (Nasdaq: COST), Jabil Inc. (NYSE: JBL), Sanderson Farms Inc. (Nasdaq: SAFM), and Scholastic Corp. (Nasdaq: SCHL).
Thursday's U.S. Economic Calendar (all times EST)
Jobless Claims at 8:30 a.m.
Retail Sales at 8:30 a.m.
Import and Export Prices at 8:30 a.m.
Bloomberg Consumer Comfort Index at 9:45 a.m.
Business Inventories at 10 a.m.
EIA Natural Gas Report at 10:30 a.m.
Three-Month Bill Announcement at 11 a.m.
Six-Month Bill Announcement at 11 a.m.
Five-Year TIPS Announcement at 11 a.m.
Fed Balance Sheet at 4:30 p.m.
Money Supply at 4:30 p.m.
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Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.