Hands Off

The up and down movement of the market along this all-time high level has folks nervous. 

Today the markets are in the control of sellers and pundits are pointing towards the extremely strong earnings reports as a reason.  The thinking being that the economy heating up will prompt the Federal Reserve to raise interest rates.

We're skeptical of that reasoning.  This market isn't overly fearful of incremental tightening.  Every trader knows that a series of quarter point hikes is in play.  Instead, we believe that the market trepidation comes from the tax bill authors repeatedly opining that 401(k) plans could be raided for government use.

Nearly everything the government does has fans on one side and detractors on the other.  But IRA / 401 plans are those rare things that nearly everyone likes.  Tampering with them for government revenue is like standing in a bucket of water and grabbing an electric fence.  Zap!

The POTUS knows this simple fact and has batted down the notion every time it comes up but, it came up again today and the markets headed further down.  The damage that would be done by citizen investors exiting their retirement equity portfolios should be obvious.

Now, we don't think that any raid of retirement plans will be signed into law but the idea that it is even being discussed is unnerving.