Blog

What the Candidates are Thinking and Brewing

Well folks, several weeks ago I started collecting comments from the large pool of  Democratic candidates with lofty ambitions for the top job if President Trump stumbles. To me, it looks like the contenders must be reading each other’s private commentaries and draft speeches. Why, you might ask? The majority of the democrats all seem to be cooking from the same playbook: Increases in taxes served in different forms but with the same bitter taste.

Joe Biden spoke first about keeping and improving Obamacare. I guess Joe didn’t want to jump out too far on a limb like some of the real risk-takers in the Democratic gang. He did, however, propose a raise in the personal tax rate to 39.6% and 28% for corporations. I guess Joe had forgotten we just had rates at that level just a short time ago.

 
Julian Castro thought that raising the top personal tax rate above the current 37% was as far as he would go. John Delaney, a U.S. Rep from Maryland, thought that the top marginal rate could go to 70%, with a move in the corporate rate from 21 to 27%. Bernie the socialist also thinks that 70% sounds like the right marginal tax rate along with several other ideas that seem to come from an unstable character who doesn’t have a full grasp of how our economy has thrived.
 

Elizabeth Warren seems to have the most to say about taxes. She seems to despise and criticize the most successful of our businessmen and women. Many of her critics believe she is driven by pure envy and lives in a fantasy world of her inflated intellect.

Kamala Harris wants to GIVE $6,000 to families earning less than $100,000 and offer renters a credit who spend 30% of their earnings on rent. The list goes on and on!

I don’t doubt that there is room for improvement in how we can improve upon how our citizens are taxed and incentivized. We will have to come up with a much better plan or approach than what is currently being offered by the candidates. Maybe luring more Mike Bloomberg’s into the race is a real solution. He certainly earned a great reputation in his 12 years as one of New York City’s greatest mayors.

If higher taxes wins the day, then my effort is to take every opportunity to make my client portfolios more tax-efficient! ……… more to come.

 

This Is The Real Rodeo

Well, folks, I am sure this week, if you have younger children at home, you were busy sorting out costumes and making sure the candy was in ample supply for the crush of trick or treaters. Sounds all pretty normal and comforting! As my prep duties at home were completed early, I started to research the potential past correlation of impeachment and market performance. Fortunately, we don’t have an abundance of home-grown events to evaluate, however some of our close trading countries had some data to contribute.

Our first impeachment attempt was levied against President Johnson who had taken office after the assassination of President Lincoln.  President Johnson, soon after he replaced President Lincoln, was charged with violating the Tenure of Officer Act for removing Secretary of War Edward Stanton. Johnson was acquitted three days after Stanton’s acquittal. Watching too much evening political coverage on President Trump’s current political standing certainly has interested me in the possibility of impeachment.

More in our time was the break-in event at the Democratic National Committee offices at the Watergate Office Complex in 1972. The spotlight was eventually focused on President Nixon and indeed it was quite the battle. Once the burglars were identified, a narrative surfaced that placed many of Nixon’s close ties at the organization and in the direction of the break-in. It was believed that the mission was to spy on the Democratic party and sabotage elements of their proposed political plans. As the story and facts started to be understood, the White House counsel was fired and the FBI director resigned for destroying evidence. It was becoming clear that more people were aware that possibly efforts to cover up any inquiry on the Watergate break-in were coming from the top. Washington was still pursuing at this time a full legislative agenda.  The Bretton Woods Agreement, which was a fixed exchange rate system established after WWII, converted to a floating rate system in March of 1973 (Nixon Initiative).

The following events all produced meaningful market moves:

 

WATERGATE:

Spying events first reported in 1972

End of the fixed rate exchange system 1973

Televised hearings in 1973

Nixon resigns December 1974

 

THE CLINTON /LEWINSKI SCANDAL:

Major drop in world equities early 1999

News of scandal breaks 1998, Clinton confession 1998

Clinton acquittal, US Equities and Bonds recover January 1999

 

 

Click below to read an interesting article by Washington-based journalist Elizabeth Drew entitled, "Will Trump Be Removed from Office."

 

https://www.project-syndicate.org/commentary/trump-impeachment-removal-from-office-real-possibility-by-elizabeth-drew-2019-10

A Robust News Cycle: Will Trump Be Removed from Office

Hello, Folks: 

It is always good to start a story with something positive for all. Progress on the trade agreement is great place to start. Last week's reported news on trade announced plenty of good news coming in for the agriculture sector. I am not sure that all the details have been nailed down, but...

Will a Trade War Push the U.S. Economy Into Recession?

Year to Date Performance

For the S&P 500, year to date performance through August 30 has been 16.74 percent this year. This is a great performance no matter how we look at it. Investors, really all of us tend to extrapolate past great performance into the coming months. It is in my opinion that the results will temper somewhat going forward as we have to face some pretty strong headwinds.

 

Holding the Media's Attention

Well,  Folks: 

 

This President is exceptionally good at holding the media’s attention on many subjects. This time around it seems to be we are stuck in the tariff trade war fiasco. The % numbers on tariffs and the dollar size of the items are certainly large numbers worthy of our attention.

 

 

Many Factors to Consider

Well, folks: 

There is plenty of new data that could influence the future direction the market takes. An inverted yield curve has been accepted as one of the better indicators of slowdowns/recessions in the making. Of the five recent periods of “meaningful inversion” (enough days to be considered credible by the Wall Street pundits) three delivered recessions, one false alarm and this one in 2019 is noted as too soon to tell. The current indications have been enough to push

May's Stock Market Was Certainly No Stroll In The Park

Well, folks:

There were plenty of reasons for the volatile month of May. The big fears were centered on the likelihood of slowing growth in all major worldwide economies. This fear immediately pushed down interest rates meaningfully in the US and produced an inverted yield curve for better than two weeks. Following quickly, business confidence dropped, exports showed signs of weakening and corporate investment also showed signs of retreating. Failure to reach a trade agreement with China and the threat of an immigration based tariff imposition on Mexico, left the US markets shaken.

May's Forecast

Well, folks:

The month of May has been off to a volatile start. However, our economy is not the problem. Going into the New Year most major research on our economy suggested a slowing of growth in the U.S. On May 10th for the first quarter of 2019,

 

Examining The Data

Well, folks:

Economic conditions and economic performance during the last quarter has resembled the velocity and stability of a roller coaster. At the beginning of January 2019, most economic forecasters didn’t foresee much in rate increases for the year. In fact, possible rate cuts and flat earnings growth seemed to dominate thinking for 2020.  However, the 1st quarter of 2019 delivered a broad-based performance surprise for the record books. In fact, for the S& P 500, it was the best rebound since 2009 *. The rebound appeared to be fueled by more of P/E expansion ( confidence) than earnings growth as the rate of growth has actually been slowing.