Quote:
Originally Posted by 2000cs
Two different sets of policies were in play; one has been eliminated. That reduced uncertainty.
The policies of greatest concern to the markets were the talk of an unrealized gains tax, a wealth tax, and increases in business income tax rates and realized capital gains tax rates. Each of those is a direct hit to stocks. I think the probability of them being enacted was priced in the market more than I had realized (masked by general market performance).
Tariffs may be put in place, but they likely will not be across the board. Targeted at countries/industries that could produce domestically, so there would be (a) substitutes available that would dampen the price effect in the US, and (b) benefits to the US companies that operate under those tariffs. That is a positive scenario for the market, but not the only scenario.
There is still uncertainty about the TCJA expirations at the end of 2025, other tax proposals, and economic growth prospects along with inflation and the impact of massive reductions in the federal government size (spending also declines and that is contractive for the economy in the short term). Again, these need to be enacted and there are significant barriers to that.
|
I think we both voted for the same person so this isn't a political discussion but rather an economic one... if you put 2 and 2 together, the plan forward is actually quite simple-
1. Extend TCJA w probably some form of corp tax cuts
2. Immediate pressure to lower rates with high chance of a new fed chair
3. Potential tariffs which would bring back inflation in combo w the rate reduction
4. Money printing and MBS purchases right back on the table.
5. Some spending will be cut but not remotely enough to offset the tax credits and the deficit will continue to sky rocket.
All of this will have very positive effects on the stock market / wall street for obvious reasons... I think likely this will have the opposite effect on everyday working folks and main street. If unemployment continues to falter it will only get worse.