Regardless of what side of the political aisle one sits there is one thing that is indisputable: Since the November presidential election, one year ago, the “markets” have been on a one-way rocket ride into black-sky territory. Never before have they been so high, which also implies, that never before have they had so much room to fall.
What is now becoming more apparent, by the day, is the political party which could reap the rewards should they coalesce around enacting legislation to help not only bolster it, but foster it for years to come, appears to be on some form of political death wish.
The real issue is this: With every lucky “click” that passes (think: no immediate market reaction to the healthcare debacle for one) – it is the establishment (aka Republican RINO or Party-elders) that appear hell-bent on further loading another round into the chamber, all out of sight from their own so-called brethren. Only to then pass it directly into their hands with both a smile and a nod.
It’s moved beyond reproach where it’s a pure, unadulterated disgrace, as well as dangerous game to play with the “markets.”
As I stated earlier, since the election, the “markets” have been on a one way rocket ride. This has manifest in the face of the Fed. raising rates, reinvestment (aka roll-over) discontinuation, implementation of balance sheer reduction, ongoing threat of WWIII, terrorist attacks, mass shootings, and more, much more.
And yet – the “markets” have not only been resilient, it would seem they have reached some form of band where the term geosynchronous orbit is more inline than “all time highs.” i.e., These “markets” now seem impervious to what’s happening on the ground from which they were launched.
But gravity has a way of humbling those that mock it, does it not?
The fuel for these “markets” to reach this altitude has been what many of us have coined as, “The Hopium Trade.” (THT) and not what every so-called “smart crowd” proclaim. i.e., “Good data, good earnings.”
THT has been the main propellant to which the entire business complex (from the solo-practitioner and small business owner, to the global conglomerate) has attached its own hopium-wagon. Healthcare reform, tax reform, spending reform, ________(fill in the blank reform) had been the promise. And what’s being delivered is absolutely anathema to what had been sold.
And the so-called “Tax Cuts And Jobs Act” of today is just the latest refute from any prior alluded promises.
In what can only be described as repugnant, it has been learned that not only was the top rate kept at 39.6%, but the coup de grâce to any remaining integrity, was that the republican party, via its own hand, inserted and tried to keep secret, that it created an even higher tax bracket within the code of 45.6%. Now known as a “stealth tax” or “bubble tax.”
The insult to injury that taxes anyone with a modicum of common sense is this: If this is both contained and was withheld from the public eye reminiscent of the latest JFK files release. WTF else is not only in there, but not in there, that they’re not telling anyone?
This is the same, as I alluded in my headline, of not just playing a deadly game, but increasing the odds for catastrophe by adding an additional round after every lucky squeeze via one’s own hand! The only thing worse (which is precisely what has happened) is in doing so – you now hand the additionally armed weapon to your brethren with not only a smile, but fanfare that this will help their “tax headaches” to go away, “Just trust us.” Again, it’s beyond reproach.
Remember, this is not the result or byproduct of some negotiation that was hammered out between two political sides. e.g., Left – Right, Rep. – Dem., et cetera. No, this is was included and inserted via the republicans solely! And (and this point can not be made too forcefully) was intentionally hidden.
If there was any doubt that this was anything other than an intentional omission, I offer the following via Danny Vinik of Politico™. To wit:
It hasn’t been advertised by Republicans, who have described their plan as maintaining the current top tax rate of 39.6 percent. And it goes against decades of GOP orthodoxy that raising taxes on the rich discourages work and reduces economic growth. Reached by phone, Steve Moore, a tax expert at The Heritage Foundation, said the surcharge was news to him. “I was just in a briefing with the White House on this,” he said. “They didn’t mention that. It seems kind of bizarre to me.”
Whether or not one agrees with the policy or not, along with the views of Mr. Moore, is immaterial. What is irrefutable is that GOP officials intentionally did not bring up the issue with even one of its more in-the-know and well-connected voices.
This is omission with fraudulent intent, in my opinion. It also borders on, scratch that, actually is – utter stupidity.
Too think (let alone believe) something such as this would not have exponentially negative consequences can only be answered via the prism of sheer arrogance. It’s absolutely disgusting, as well as disturbing.
The issue at hand is that every understands (at least those who apply critical thinking) the president is not a policy wonk. He’s not going to be able to cite tax law and more, with all its idiosyncratic possibilities and effects. However, what he is, or represents – is – the reason and fuel for the “markets” current trajectory. He is, for lack of a better term: the embodiment and representative of the idea, or the mouth piece for it. i.e, Tax reform, regulatory reform, healthcare reform et cetera.
The party (or chambers if you will) are where the minutia is supposedly hammered out to fit the vision of what is called for. What we’re seeing delivered via that process is anything but. And, in actuality, is more akin to double-dealing, back-handed, shady dealings for self-enrichment within an echo chamber. It’s all going to backfire miserably in my view, and soon.
To be clear: this isn’t an endorsement for either party or candidate. This is about how business has to view the political landscape and prepare accordingly, whether it be a democrat or republican that put the proposed legislation forth.
When he (the president) campaigned, as did the entire party, the repeal of Obamacare was supposed to be taken to mean just that, tax cuts, again, were meant to be just that, along with regulatory reform, and more.
But now? Now, we have come to realize (as well as to terms) any, and all of it, has meant anything but that.
Only via the president himself taking executive action to eliminate or repeal certain provisions has there been any resolution on the edges. A process that, once again, allows for it all to annulled, and again, reinstated via the stroke of a pen.
Businesses can not, nor will not, make plans or commit resources to Capex or hirings based on regulatory or tax codes that have no permanency in their implementation. We may have seen some initial front-running by some, but that will end faster than it began once it’s deemed they’ve been politically duped, once again. Period.
Whether or not one agrees with the President, one thing is abundantly clear:
Every time he has openly pulled-the-political-trigger to possibly end this game of russian-roulette via the “markets.” With every lucky squeeze (think: the ongoing healthcare debacle and more, and the “markets” non-reaction too it) it’s been his own party, the party which now controls both houses, with a president willing to sign just about anything, that’s delivered nothing except for a now ever apparent, ever-the-dangerous, now fully loaded political weapon.
Again, not only does the establishment appear to be not working honestly with the administration. But, secretly, continually adding subsequent round after round into any remaining politically open chamber. Then smiles, and kindly hands it back, all on live TV!
This newest revelation proves out that allegory. It’s now beyond repugnant.
It does not matter what side of the political aisle one sits, for this is not about politics per se, this is about business. And it is that assemblage of the entire business complex of the United States that is the life blood of this nation, its people, and its finances.
Regardless who is in office currently, or whom is controlling all branches: these business entities that are so desperately needing relief from much of this socialist, crony-capitalism, with overtones of communistic intrusion, had great hope that maybe, just maybe, relief was on the horizon. It’s been a roll-of-the-dice to start with. That was assumed, or knew, going in.
Again, they/we all knew, or assumed, the “dice” were always loaded. What has been appalling is that the republican party itself, the party that ran on a platform that got it elected to begin with, has not only switched the dice, but replaced the “game” entirely with something far more dangerous, where now there’s a “fully loaded” political weapon pointed directly at the “markets” head.
How the “markets” respond from here is anyones’ guess. Yet, it’s not that hard to assume it ain’t gonna be pretty now that they know the game has not only been switched from a game of chance, but rather, to one where it’s known too all that the final empty chamber has not only been revealed…
© 2017 Mark St.Cyr