A busy week for earnings will wrap up with highlights from the industrial sector taking centerstage.
These reports will come a day after the major U.S. indexes finished mixed, but ultimately little-changed though the Nasdaq did eke out a tenth-straight gain.
With tech stocks at a record high — and stalwarts like Microsoft having doubled their market cap in just about three and a half years — some may worry that we’re setting up for a repeat of the tech bubble. Others may point to research like what we highlighted out of BlackRock that shows tech earnings are rising in-line with the index’s overall march higher.
Sometimes, things are different. And, on cue, Microsoft beat on earnings Thursday after the close and were up 3% in after hours trade.
Elsewhere on the calendar on Friday there will be no major economic data releases, and so on balance, expect a light day of market action.
‘Verbal government approval’
On Thursday, Tesla (TSLA) CEO Elon Musk tweeted that his Boring Company venture received “verbal government approval” to build a Hyperloop — the super-fast underground train he’s been working on — between New York and Washington, D.C.
Many on Twitter quickly wondered what “verbal government approval” really means, and while the White House did confirm there had been some talks between Musk and administration officials.
Musk added that there is “still a lot of work needed to receive formal approval, but [I] am optimistic that will occur rapidly.” A few hours later, Musk tweeted, that, “If you want this to happen fast, please let your local & federal elected representatives know. Makes a big difference if they hear from you.”
And he’s right — constituents making noise is the most effective way for their representatives to act on their behalf (and also know when they’re not).
Business Insider later reported that several government officials in cities which would certainly be impacted by such a project hadn’t heard about it. Which is not a total surprise — “verbal government approval” is an almost necessarily slippery concept considering that nothing related to the government happens on a handshake-type basis.
If you want to put a fence in your yard, for example, you likely need approval from the township in which your house is located. When that permit is approved and the fence is far enough off the property line, is the right height, is built to code, then you can build the fence.
So, digging a whole underneath New York City, then New Jersey, Philadelphia, Baltimore, and Washington, D.C. will need a lot of approvals. (To say nothing of raising the money for the project.)
But this isn’t to be too hard on Musk and his unconventional characterization of this ambitious project’s status among government officials.
Corporate America today is often panned for its use of financial engineering to inflate stock prices, keep executive bonuses up, and all of this at the expense of increasing worker pay and investing in real innovation. Think of this as the corporate side of the economic “secular stagnation” thesis that a number of factors right now are coming together to keep growth down in the U.S. economy.
On this background, then, Musk’s vision for a super-fast tunnel that will transport people between major cities in the most densely populated stretch of the country is exactly the kind of big idea that seeks to break corporate America out of its malaise.
And if this idea is going to actually work, Musk will eventually have to do better than a verbal government agreement. But at least it’s a start.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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