Hi BenjaminIs,
I went through the report that you shared in post 4505. Interesting post. My findings are - although summary is in the end.
- Lower taxes creates stimulus through multiplier effect. Tax savings are either spent or saved which is a good thing for the US.
- Taxes saved by companies should to a certain part be handed down to the worker (Reagonomics trickle down effect).
- Lower corporation taxes should create an influx in companies relocating to the US..especially China is worried here.
- Negative for US bond holders as can be seen by rising yields and falling bond prices
- Stock market should still be ok and the recent crash was merely a correction due
However debt will increase but this must be seen in relation to other western countries who have similar debt levels as the US. Moreover the US dominates global trade and world debt issuance there is no shortage of demand in bonds.
Currencies: 60% of all countries anchor their currency to the USD thus there is always demand for the dollar which keeps him up from jumping over the cliff. Other countries should be more concerned especially EU with Italy as its biggest problem from a political and financial standpoint. Fed also stopped printing money as opposed to the EUR giving the USD further strength. The pink elephant in the room are rising interest rates that sooner or later makes the payback of debt and asking for debt dearer. However it is not the USD and the US that has the problem but first Europe and then Japan.
Finally stocks should still go higher. Recent dip was normal and not a problem as usually when markets fear investors seek safe haven into bonds and gold which has not happened.
in summary. Long USD Short EUR. Long Stocks, Short Bonds. This is a long term investment stance.
My question here is ....due to the tax reforms a lot of this has already price in..hence the rise of the stock market since Trump was elected. What happens when the reform has been implemented? Would we not see a turnaround?
Another question. Why would spending be good for the US economy? The US hardly produces physical goods..ok cars but other than that the majority of products are still manufactured outside the US. Hence the dollars are actually flowing out again in exchange for products. Also the US population is not really famous for saving. I am a bit doubtful on this thinking.
Furthermore even if Trump goes ahead with his tarrifs (not included in the article) the problem is that the consumer still thinks twice whether to buy a very expensive american product. lets face it...All western nations are too expensive..everybody wants it cheap. Who wants to pay again 3000 USD for a television?
I went through the report that you shared in post 4505. Interesting post. My findings are - although summary is in the end.
- Lower taxes creates stimulus through multiplier effect. Tax savings are either spent or saved which is a good thing for the US.
- Taxes saved by companies should to a certain part be handed down to the worker (Reagonomics trickle down effect).
- Lower corporation taxes should create an influx in companies relocating to the US..especially China is worried here.
- Negative for US bond holders as can be seen by rising yields and falling bond prices
- Stock market should still be ok and the recent crash was merely a correction due
However debt will increase but this must be seen in relation to other western countries who have similar debt levels as the US. Moreover the US dominates global trade and world debt issuance there is no shortage of demand in bonds.
Currencies: 60% of all countries anchor their currency to the USD thus there is always demand for the dollar which keeps him up from jumping over the cliff. Other countries should be more concerned especially EU with Italy as its biggest problem from a political and financial standpoint. Fed also stopped printing money as opposed to the EUR giving the USD further strength. The pink elephant in the room are rising interest rates that sooner or later makes the payback of debt and asking for debt dearer. However it is not the USD and the US that has the problem but first Europe and then Japan.
Finally stocks should still go higher. Recent dip was normal and not a problem as usually when markets fear investors seek safe haven into bonds and gold which has not happened.
in summary. Long USD Short EUR. Long Stocks, Short Bonds. This is a long term investment stance.
My question here is ....due to the tax reforms a lot of this has already price in..hence the rise of the stock market since Trump was elected. What happens when the reform has been implemented? Would we not see a turnaround?
Another question. Why would spending be good for the US economy? The US hardly produces physical goods..ok cars but other than that the majority of products are still manufactured outside the US. Hence the dollars are actually flowing out again in exchange for products. Also the US population is not really famous for saving. I am a bit doubtful on this thinking.
Furthermore even if Trump goes ahead with his tarrifs (not included in the article) the problem is that the consumer still thinks twice whether to buy a very expensive american product. lets face it...All western nations are too expensive..everybody wants it cheap. Who wants to pay again 3000 USD for a television?