Friday, November 10, 2017

Stocks Balk at Indecisive Congressional Tax Reform Efforts

Stocks tumbled at midweek as prospects for comprehensive tax reform dimmed in Washington.

The Senate was roundly blamed for the poor performance on the session, as a handful of Republicans expressed doubts over the version of the package submitted by the House days earlier.

A Republican bill was presented, with significant changes, including a permanent 20% business tax rate which would be implemented in 2019. The delay of more than a year concerned investors, though such concern is largely a canard, being that the effective rate for most significant corporations is about 14%.

As the day wore on the pain subsided and late buying boosted averages, though not enough to offset an across-the-board decline, putting the major indices in the red for the week.

Without a positive narrative and strategy for tax reform forthcoming for the congress, it appears that President Trump will be thwarted once again in his efforts to Make American Great Again, though many may argue that his initial tax proposals fell far short of any significant, progressive changes to the tax code.

Simplification would be an effective measure towards keeping the Trump loyalists in camp, but that does not appear to be on the congressional agenda, as per usual.

There's spreading sentiment that nothing will be done in terms of tax reform, which, like Social Security, Medicare/Medicaid, and immigration, has serious problems which year after year seem to defy the ability of congress to implement meaningful change. The more convenient route of promising change and delivering nothing of consequence appears to be the overriding theme of a congress that's essentially done nothing of benefit to the general population for the past twenty years.

As far as Wall Street is concerned, Washington is more a parody, a thinly-veiled lie at effective governance and thus it is, more often than not, discounted as meaningless.

The declines of Wednesday will be considered a sign of weakness, though most will express the opinion that "it's only a flesh wound."

At the Close, Thursday, November 9, 2017:
Dow: 23,461.94, -101.42 (-0.43%)
NASDAQ: 6,750.05, -39.06 (-0.58%)
S&P 500: 2,584.62, -9.76 (-0.38%)
NYSE Composite: 12,339.66, -45.05 (-0.36%)

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