Stocks sold off on Friday despite the earnings beats from Amazon and Alphabet on Thursday afternoon. They helped the Nasdaq be the best performing index for the day as it was down 0.02%. Because the big technology firms have no impact on the Russell 2000, it fell 1.18%. The weak GDP report was the negative news which dragged stocks lower. Stocks also have a strange losing streak on Fridays as the last Friday the stock market was up was March 10th. Stocks being down six Fridays in a row doesn’t signal anything to me, but I figured it’s worth noting.

Budget Deal

There was good news on the legislative front Friday as the Democrats and Republicans agreed to a temporary stopgap budget which lasts until May 5th to prevent the government from shutting down. On face value, that is a ‘nothingburger’, but when you look at the details, you can see that a real budget will be agreed upon shortly. As I predicted, the Republicans agreed to fund the cost-sharing reduction payments to insurance providers to subsidize low-income healthcare plans. This was the main goal Democrats wanted to achieve in these negotiations. The budget needs 60 Senate votes to pass, so they needed to be convinced to get on board. It wasn’t surprising that the GOP changed its position because it is better politically to come up with a new plan instead of taking funding away from low-income people who would have had their premiums raised, if nothing was done.

Trump’s Fed Chair Pick

The latest rumors on who Trump will pick as Federal Reserve chairperson suggest that he’s considering selecting Gary Cohn who is the Director of the National Economic Council and Trump’s closest economic advisor. The reason why Trump wants to select Cohn tells us what his frame of reference will be no matter who he picks. Trump likes Cohn because he’s in favor of deregulating the banks and low interest rates. Usually Presidents like low interest rates because they lower deficits which allow the government to spend more money on fiscal policies. Spending money on fiscal policies isn’t the most efficient way to boost the economy, but it is the best politically because the President gets to point to specific policies which he implemented to improve growth.