Skip to main content

May the Force be with You!

As millions of people, I was eagerly waiting for Star Wars: The Last Jedi. I even did advance booking  for all my team members back in Oct. The movie did meet the expectations of all the hype. The story line is kept simple and even though it was a bit long, it kept audience engaged. Now the wait starts for Episode 9! 2019 is going  to be big year with Cricket World Cup, GOT final season and Star Wars Final Episode!
The final details of tax bill is out. Let's take another look at some of the "Good, Bad, Ugly" aspects we discussed back in Nov. 
  • Tax brackets went back to 7 but still simplified with lowest starting at 10% and highest at 37%. Generally its good since overall rates have come down for everyone
  • Corporate tax rate reduced from 35% to 21%. They could have settled down with 22% and given more tax cuts to individuals. But we know who controls GOP so this was expected
  • Expands child tax credit - thanks to Marco Rubio. Looks like he is one of the rare ones in GOP who is looking after not so fortunate. Well done Marco!
  • AMT for individuals is still kept. I can't understand how this goes with supposedly simplification of tax-code. They should have got rid of this and instead kept AMT for corporates
  • Changes on how corporate taxes are calculated. It's generally good so that we don't need repatriation debate again. Companies can pay taxes where they earn and bring back money at will without too much financial engineering
  • Education benefits - removed proposal of taxing tuition waiver. Someone must have gotten wiser that higher education is critical for US competitiveness!
  • The most ugly part (specially for CA, NY, NJ residents) of not able to deduct state taxes remains. These are BLUE states and GOP don't give a damn about them. It's politics after all!
  • The biggest tax reforms after 1986 is marginally positive and would sail through congress next week and President Trump would claim as "Biggest Christmas Gift" for American people.
What does it means to stock markets which are already at all time high? Should one follow "Buy the Rumors, Sell the News"? Based on many experts, these tax reforms are:
  • About 50% priced in markets
  • Should marginally improve GDP growth above 2%
  • Should increase corporate earnings by about 5%
  • That means we could see stock markets heading higher by end of year and well into spring. Q4 results and Q1 forecasts would decide overall direction beyond that.
Given all the news and discussions around Bitcoin, you may want check out well-written article in New York Times by Prof. Robert Shiller. 
Bitcoin = Ambiguity + Animal Spirits (there is no economics at play here) and hence no one can predict it's price.
Happy Holidays and May the Force be with you in 2018!
/Shyam

Comments

Post a Comment

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...
Post a Comment
Read more

Elections and Rotations!

2024 will be known as an important year in terms of elections (97 nations covering half the population) across the major countries in the world. We are only halfway thru the year and already some key nations have gone thru elections and voters have indicated their preference for change (in a way). Let's take a look at few. India - Modi's BJP started with lots of enthusiasm with slogans of "Modi ki Guarantee" and "400 paar" (more than 400) seats (out of 543). Indian voters (which I considered one of the most smartest) gave reality check to Modi and BJP by reducing BJP count to 240 (from 303 in previous parliament) forcing it to form coalition government. I have lot more detailed hypothesis on these results (but not here). Almost everyone (including me) got their predictions wrong and lost some friendly bets. Indians want balance between "Strong, Prosperous, Proud" India with "Inclusive, Employment and Harmony". Modi and BJP are quick learn...
Post a Comment
Read more

The "i" factors are back again!

Happy Earth Day! In following Stotra, we remember Mother Earth every morning before touching feet to the ground. समुद्रवसने   देवि   पर्वतस्तनमण्डले   । विष्णुपत्नि   नमस्तुभ्यं   पादस्पर्शं   क्षमस्वमे   ॥ Samudra-Vasane Devi Parvata-Stana-Mannddale | Vissnnu-Patni Namas-Tubhyam Paada-Sparsham Kssamasva-Me || Meaning : 1:  (Oh Mother Earth) O  Devi , You Who have the  Ocean  as Your  Garments , and  Mountains  as Your  Bosom , 2:  O  Consort  of  Lord Vishnu ,  Salutations  to  You ; Please  Forgive my Touch  of the  Feet  (on Earth, which is Your Holy Body). (source: Green Message site) So let's make sure that we honor Earth every day and preserve her for millions of years..After all we have only ONE! It has been six weeks since I wrote about markets. During that time, markets reached all time highs (almost touching 5300) and down by 5% from those levels. W...
Post a Comment
Read more