The economic calendar is another big one, with an emphasis on the employment situation. Despite this, everyone will be scrambling to analyze the tax cut legislation. I expect many to be asking: What do the tax cuts mean for financial markets?

Last Week Recap

In the last edition of WTWA I predicted that attention would turn to the tax cut debate, with little attention to the economic data. That was an accurate guess, as the story took many twists and turns. My forecast that the legislation would not pass was mistaken. This broke my long string of successful forecasts of decisions on policy matters.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. Jill Mislinski’s weekly version is first-rate, pulling together several key points in a single look. She notes the highs and lows of the week, the nearness to the record high, the overall weekly change, and the intra-day excitement on Friday.

The rest of the weekly post provides charts on drawdowns, volume, volatility and other key factors. Check it out. Meanwhile, let’s treat ourselves to an additional look at a long-term perspective.

The excellent chart design, using a vertical log scale, makes it easy to compare moves from different times.

The News

The economic news continues to beat (or nearly match) expectations on a wide array of measures. This is true even though the expectations are significantly higher than usual. Last week we had strong data on housing, auto sales, GDP revisions, the ISM index, and consumer confidence. Earnings expectations remain positive.

The Week Ahead

We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react.

The Calendar

We have a big calendar with an emphasis on employment. The ADP report deserves attention as an independent measure with a good approach, but most will focus on Friday’s official data.

Briefing.com has a good U.S. economic calendar for the week (and many other good features which I monitor each day). Here are the main U.S. releases.

Next Week’s Theme

Despite the always important employment news, financial media will emphasize the tax cut legislation, the likely result of the House/Senate Conference, and the implications for financial markets.

There is plenty of political commentary on this topic. The heated debate continues, and it is good fodder for financial bloggers and news media of all types. That is not my mission. We should accept the reality of the new policy and think about our best investments.