Markets, Tax Cuts, a Tale of Two Cities… and Politico?

Jim Woods

The hope of tax reform. It’s what I’ve been telling you, as well as telling readers of my Successful Investing newsletter, has been the key to this market rally since November 9, 2016.

That, of course, is the day after Donald Trump was elected president. And ever since then, markets have rocketed higher on the hope that President Trump and a Republican Congress could put in place key elements of the pro-growth economic agenda he told America he wanted to enact.

That agenda is comprised of regulatory rollback, Obamacare repeal-replace, tax reform that includes a reduction in the corporate tax rate and a foreign profit repatriation holiday. And while there has been regulatory rollback, there was no Obamacare repeal and replace.

Last week, the remaining leg of the pro-growth agenda — corporate tax cuts and a repatriation holiday — appeared to be in serious trouble.

The reason why had a lot to do with the reaction to President Trump’s stunning remarks regarding the deadly violence in Charlottesville, Virginia. Recall that last week, I mentioned that the president’s “both sides to blame” comments about the violence had alienated key members of his own party, and especially key members in Congress that he needs to help pass tax reform legislation.

Apparently, the comments also roiled the president’s key economic advisor, Gary Cohn.

According to multiple news reports, Mr. Cohn was “upset” and “disgusted” with the president’s response to the violence in Charlottesville, and was actually considering leaving the administration because of it.

That news last Thursday resulted in the biggest one-day decline in markets in months, as stocks sank nearly 2% across the board. Now, it’s not that Wall Street necessarily loves Gary Cohn, although he is trusted and respected by the Wall Street elite. The bigger issue is that Mr. Cohn’s departure would be interpreted as a true tax reform killer. And if tax reform is dead, then so too is the Trump bull market.

Exclusive  My Meeting with Top Government Economic Officials

Fortunately, this tale-of-two-cities drama took a bullish turn this week, and it did so thanks to a story that appeared on the Washington-insider website Politico.

The article implied there was substantial progress being made on corporate and personal tax reforms, which served to reverse the decline in stocks resulting from the Cohn resignation rumor. And given the absence of any other material catalysts on Tuesday, stocks rallied on that report.

The bottom line here is that these two extreme days in markets were prompted by separate media reports regarding the fate of tax reform. The negative report of a potential Cohn resignation (which proved untrue) took stocks down hard and fast. Then a positive report on tax reform and the progress made by key administration and Congressional figures sent stocks soaring.

Now, do you have any doubt remaining that what I’ve been telling you about tax reform being the key to this bull market is true?

I should hope not.

In case you missed it, I encourage you to read my e-letter from last week about how President Trump’s remarks on the Charlottesville event hurt his presidency and his pro-growth agenda.

Upcoming Appearances

San Francisco MoneyShow, Aug. 25-26: If you’re in “The City” this weekend, stop by the San Francisco Marriott Marquis and see me, as well as many of the other great industry speakers, at the San Francisco MoneyShow. I will be giving two presentations, the first on Friday, Aug. 25, 2017, 6:00 p.m. – 6:45 p.m., titled: “ETFs and the Music of the Markets.” The second will be Saturday, Aug. 26, 10:45 a.m. – 11:30 a.m., titled, “5 ETFs to Fight the Fake News.” For your complimentary tickets, go to Woods.SanFranciscoMoneyShow.com.

Exclusive  Daily Data Flow: Stocks up as Reports Beat Estimates; Sequester Layoffs Could Draw Litigation; Euro Continues Fall after Italy Election

 

Bierce on Oceans and Irony

“Ocean: A body of water occupying about two-thirds of a world made for man — who has no gills.”
— Ambrose Bierce

The irony of nature is all around us. As the great Ambrose Bierce reminds us, we live on a planet that’s mostly water, yet we can’t drink that water, nor can we breathe it. It’s the same situation with much of life. Man has limited resources, limited time and limited energy. Yet for most of us, we want to do it all. Given the finite nature of the time we have on this ocean-dominated planet, doesn’t it just make sense to live life to the fullest, and to maximize the truly important aspects of life such as love, relationships, productive achievement, helping our fellow man and creating financial stability for ourselves? I certainly think so.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Click here to ask Jim.

In the name of the best within us,
Jim Woods
Jim Woods
Editor, Successful ETF Investing

Like This Article?
Now Get Jim's FREE Special Report:
The Top 11 Dividend ETFs to
Buy Right Now

Get up to 5X the yields of traditional income plays.

Get Access to the Report, 100% FREE


img
previous article

Investment expert Jim Woods shares the details on this large-cap growth fund.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE