So you sold off your utility shares and other high yielding holdings scared off by the prospect of higher interest rates. And that might yet come, given Fed Chair Yellen's hawkish views today in Washington.
But the hike expected next month is already in the market if the sell off in bonds means anything. All of the damage there is most likely not just wishful thinking about more fiscal stimulus. But there might be fly in that linear thinking salve, an apparent overlooked one by many. The Trump corporate tax cut should it happen.
In his Financial Times "Hunt for groups that are not yet priced properly for a tax cut," John Authers cites Citi equity strategist Tobias Levkovich, "a cut to 20 per cent from the current effective rate of nearly 27 per cent would add $12 to his current top-down estimate of $129 for next year's S&P 500 earnings." Authers then ask which firms would be most sensitive to the tax cut, pointing out energy is one sector that has already benefited lower rates owing to loopholes or inversions.
Inversion were not very popular with Democrats and the outgoing administration you will recall. Quoting Levkovich, Authers writes: "telecoms and utilities stand to benefit most." Adding to that and the much disliked inversions where some politicians called those firms who sought them "traitors" and "un-American." It's a toss up which of these two pathetic excuses for parties and political leadership likes name calling the most, but by our reckoning it's the left.
Hoards of non-US earning idle overseas owing to unfriendly tax laws here at home. Should that change significantly that money could find its way here and add fuel to the markets flames in the form of buybacks and higher dividends. Critics will no doubt protests this won't help jobs and productivity. No, probably not. But it might help pension funds and insurance companies and other yield-starved folks.
It might also boost small cap firms despite their already strong performance. This is not to say, as Authers notes, there's an absence of other headwinds. There certainly are some loitering about. But if you're an investor you often have to take what the market gives you and skip all the name callers and economists flapping their tongues. That is, unless you've forgotten these academics have successfully predicted 10 of the last three recessions.
But the hike expected next month is already in the market if the sell off in bonds means anything. All of the damage there is most likely not just wishful thinking about more fiscal stimulus. But there might be fly in that linear thinking salve, an apparent overlooked one by many. The Trump corporate tax cut should it happen.
In his Financial Times "Hunt for groups that are not yet priced properly for a tax cut," John Authers cites Citi equity strategist Tobias Levkovich, "a cut to 20 per cent from the current effective rate of nearly 27 per cent would add $12 to his current top-down estimate of $129 for next year's S&P 500 earnings." Authers then ask which firms would be most sensitive to the tax cut, pointing out energy is one sector that has already benefited lower rates owing to loopholes or inversions.
Inversion were not very popular with Democrats and the outgoing administration you will recall. Quoting Levkovich, Authers writes: "telecoms and utilities stand to benefit most." Adding to that and the much disliked inversions where some politicians called those firms who sought them "traitors" and "un-American." It's a toss up which of these two pathetic excuses for parties and political leadership likes name calling the most, but by our reckoning it's the left.
Hoards of non-US earning idle overseas owing to unfriendly tax laws here at home. Should that change significantly that money could find its way here and add fuel to the markets flames in the form of buybacks and higher dividends. Critics will no doubt protests this won't help jobs and productivity. No, probably not. But it might help pension funds and insurance companies and other yield-starved folks.
It might also boost small cap firms despite their already strong performance. This is not to say, as Authers notes, there's an absence of other headwinds. There certainly are some loitering about. But if you're an investor you often have to take what the market gives you and skip all the name callers and economists flapping their tongues. That is, unless you've forgotten these academics have successfully predicted 10 of the last three recessions.
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