President Joe Biden and Treasury Secretary Janet Yellen are proposing a "global minimum tax" of 21%, and a major increase in the corporate tax in the United States to 28%. The tax increases are expected to "knock 9 per cent off earnings per share for companies in the S&P 500 next year," according to calculations by Goldman Sachs. Hit especially hard will be communications services and tech, aka the FAANG companies that have been driving growth in the stock market. Aziza Kasmov writes in FT: Communication services and information technology are likely to be among the biggest losers from … [Read more...]
Archives for April 2021
Businesses Optimistic As States Ease COVID-19 Restrictions
Businesses in both services and manufacturing industries are growing more optimistic as states remove restrictions meant to help fight the spread of COVID-19. Many of those restrictions made it difficult for businesses to operate. Jeffrey Bartash reports in MarketWatch: The numbers: The large service side of the U.S. economy surged in March as governments lifted businesses restrictions and rising vaccinations gave Americans more confidence to go out and shop, travel or take a vacation. A survey of business leaders at service-oriented firms such as banks, retailers and restaurants jumped to … [Read more...]
Don’t Chase Yield Off a Cliff, Do This Instead
You may think the phrase "speculative investor-driven home price bubble" sounds familiar. If so, you may be old enough to remember 2008, when an extremely low interest rate environment, encouragement by the government to lend, and yield chasing investors on Wall Street combined to tank the economy. Deja vu, right? Ryan Dezember reports in The Wall Street Journal: A bidding war broke out this winter at a new subdivision north of Houston. But the prize this time was the entire subdivision, not just a single suburban house, illustrating the rise of big investors as a potent new force in the U.S. … [Read more...]
The Biden Backlash
The problem with trying to jam through transformative economic policy with 50 votes and the Vice President is that states will resist. Gregory Meyer reports in the FT: Republican-led state capitols are considering bills that would punch holes in President Joe Biden’s green revamp of the US electricity system by promoting fossil fuels or piling costs on to renewable energy. The proposed legislation reverses a dynamic that played out over the past four years, when lawmakers in states controlled by Democrats moved to counteract Donald Trump’s climate rollbacks. One analyst described a “Biden … [Read more...]
April RAGE Gauge: Are Your Bond Funds Dead or Alive?
My April RAGE Gauge is in, and RISK remains HIGH. Therefore, I want you to be a mindful and cautious investor, especially with your “safe” money. Your anchor-to-windward savings need to be safe. I’m talking specifically about bonds. Bonds are not dead, far from it. They’re alive and well, especially if you have access to new and secondary market issues. And not just letting the chips fall as they may. Remember, bond prices swing in the opposite direction of interest rates. Their sensitivity to interest rate swings is measured by duration. As a rule of thumb, duration (measured in years) … [Read more...]
You’re Telling Me Friends Ask You This Question
You’re telling me what friends are asking you the most. But first, let’s take a step back. You’ve been through a lot over the last year. Most of you stuck with me as we watched the world turn upside down. We lived to fight another day. Hey, I’m Your Survival Guy, not your "hope we make it" guy; what did you expect? You didn’t think I’d leave you behind, did you? You didn’t panic (maybe a little), you didn’t drop to your knees and raise your hands to the sky in despair (it’s OK, no one saw that), and you stuck to your plan (too scary not too). You made it through in your own way in one of the … [Read more...]
FACTORY SHUTDOWN: Semiconductor Shortage Halts Auto Production at Some Plants
A global shortage in semiconductors has begun impacting automobile production as companies can't source enough chips. Ford Motor Company is the latest to be impacted and has announced a plan to idle production of F-150s. Christina Rogers reports in The Wall Street Journal: Ford Motor Co. F -1.69% is scheduling more downtime at several U.S. factories, including its two major truck plants, as a global shortage of semiconductors upends vehicle manufacturing for car makers in North America. The company said Wednesday that it would halt production for two weeks in April at its truck plant in … [Read more...]
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