Trump’s Tax Survey – Already Predetermined


TAXES-TEXT

  1. In order to achieve the American Dream, Americans must be able to keep more money in their pockets and increase after-tax wages.
  2. We must work to simplify the tax code by reducing the number of income brackets.
  3. Income Taxes are no longer necessary when money is not tangible. See solution on YouTube
    We must discourage corporate inversions in order to grow the American economy.
  4. We must make America a globally competitive nation again.
  5. Our plan must be fiscally responsible in order to not add to our already staggering debt.
  6. We must eliminate the death tax.
  7. We must reduce or eliminate deductions and loopholes that only benefit the very rich.
  8. Simplifying the tax code and cutting every American’s taxes will boost consumer spending while encouraging savings and investment.
  9. We must cut the corporate tax rate and allow the United States to compete internationally.
  10. Corporations must no longer be able to defer taxes on income earned abroad.
  11. Our lower tax rate must also apply to small business, allowing entrepreneurs and freelancers to grow and prosper.
  12. Our lower tax rates will provide a tremendous stimulus for the economy, significant GDP growth, and a huge number of new jobs.
  13. Our tax code overhaul must return power to the states.
  14. We must eliminate the marriage penalty and the Alternative Minimum Tax.
  15. We must allow working parents to deduct childcare expenses for up to four children and elderly dependents.
  16. We must reduce or eliminate the capital gains tax.
  17. We must have import tariffs from other countries at the same rates as those countries that impose on U.S. products.
  18. We must change the border-adjustment tax so companies can no longer deduct imports as costs.
  19. We must pass tax reform legislation in order to ‘Make America Great Again!’

The Dow Jones for the Close of April 2017


DJIND-W 4-28-2017

QUESTION:  Mr.Armstong in the past you talked of a down trun in the market in May.Since Trums TAX you have gave the impression everything is ok till 2018 is that correct?

THANK YOU

SM

ANSWER: There has not appeared to be a condition where one would warn of a crash in the stock market. The decline into May has been more of a sideways consolidation. The high remains the week of February 27th, 2017 at the 21169.11 level. In cycle analysis, what you look at is the direction. That forecast would have been wrong if the market made new highs above that of the week of 02/27/17. Moving sideways is still a cycle low rather than a high. The key point was the 20,000 level on the Dow. I have stated that a serious correction would only happen with a weekly closing beneath that level.

Today, a Weekly Bullish stands at 20970. We are currently trading at 20954. A close above that level will warn this is starting to firm up. You can see our Energy Models have been declining rather than rising. This has indicated the consolidation and it warns we are not at the precipitous from which a major crash is likely.

On the monthly level, here too we see 20975 as the important resistance and 202881 as the support for the close today. Everything is showing this 20770-20975 level as critical. The failure to exceed that level for the close today warns that the consolidation is not yet complete. Last month’s low was 20412.80. A closing below that would be technically bearish and confirm a drop into May.

We will lay out the longer term in a more detailed published report.

30Y Treasury Yield Jumps Near 3.00% Despite Dismal GDP Growth


Tyler Durden's picture

Nothing says sell bonds like the worst quarterly growth for a Fed rate hike since 1980

 

but that’s what is happening…

Here’s why – Treasuries under pressure after 1Q employment cost index rose 0.8%, largest gain since Q1 2007, a sign of inflationary wage pressures as both pay and benefits accelerated

US GDP Collapses To 0.7%, Lowest In Three Years; Worst Personal Spending Since 2009


Tyler Durden's picture

The Atlanta Fed was right once again, and slashing its forecast over the past 3 months today the BEA confirmed that in the first quarter US economic growth tumbled to just 0.7%, down from 2.1% in the last quarter and below the 1.0% expected, and the lowest print in three years going back all the way to Q1 2014.

Broken down by components, the disappoing number reflected increases in business investment, exports, housing investment, offset by a big slowdown in consumer spending. The increase in business investment reflected increases in both structures and equipment, notably a significant increase in mining exploration, shafts, and wells.

These positive contributions were offset by decreases in private inventory investment, state and local government spending, and federal government spending.

The increase in exports reflected an increase in nondurable industrial supplies and materials, notably petroleum. Also on trade, imports, which are a subtraction in the calculation of GDP, increased in the first quarter of 2017. As the chart below shows, the dramatic drawdown in trade as a result of the soybean export surge giveback is now over, and net trade contributed a modest 0.1% to Q1 GDP.

But the biggest culprit for the atrocious GDP print was the collapse in consumer spending, which rose at just 0.23% annualized, the lowest increase since 2009, and reflected an increase in services offset by a decrease in motor vehicles and parts. In short: for whatever reason, spending in the first quarter imploded.

Elsewhere, looking at PCE, prices rose 2.6% Q/Q, above the 2.3% expected, and higher than last month’s 2.0%. Core PCE rose 2.0%, in line with expectations.

Once again, the bulk of the PCE growth came from rising healthcare service prices, with the rest barely registering.

Food prices increased in the first quarter following a decrease in the fourth quarter of 2016. Energy prices increased in the first quarter of 2017 following a larger increase in the fourth quarter of 2016. Excluding food and energy, prices increased 2.3 percent in the first quarter of 2017, compared with an increase of 1.6 percent in the fourth quarter of 2016.

The Confidence Game – The Next Crisis


Confidence-wide

QUESTION: Martin, I started following your models shortly after college in 2000 when I entered the financial advisor world. I soon realized how clueless this industry was and formed a hedge fund in Tampa in March 2007 to short retail and housing, largely based on your models & my understanding of cycles. I reached the top 1% in Morningstar through Sept of 2008 right up until the government banned shorting. I could not receive quotes from my Goldman Sachs trading platform and I lost a lot of money in a few short hours. I eventually had to shut down the fund and my investors took losses. It was this period where I learned the error in my thought process, I underestimated the length to which the Government & politicians would go to kick the can further down the road and underestimated the big banks inside influence on the “free markets”.

Your recent post regarding inflation and the end of Quantitative Easing had me thinking, wouldn’t the moment the politicians realize there is a recession on the horizon and inflation begins to cripple the housing followed by retail, etc, wouldn’t they re-institute QE and expand the balance sheet further regardless of the future implications? It seems politicians will do whatever it takes to avoid the worst and continue to kick the can down the road to save their own careers.

Thank you for your provoking thought and mindful awareness while everyone else buries their heads in the sand.

R

credit-anstalt

ANSWER: The outcome always depends upon confidence. It is what you believe that counts rather than the facts. When Credit Anstalt went belly-up in 1931, why did an obscure bank in Austria set in motion the 1931 Panic and Sovereign Debt Defaults that made a recession into a Great Depression? The answer was found in the name. One of the owners was the Rothschilds. When people heard the Rothschilds went bust, they began selling all the banks because if they went down, everyone else surely would. They were the Goldman Sachs of the day.

Hoover - Loose Cannon

I suggest reading Herbet Hoover’s Memiors from 1931. This is a confidence game. Just because QE appeared to work before does not mean it will work a second time. The middle-class lost money and their living standards were sharply reduced. Retail investment in equities has not yet returned to even 50% of 2007 levels. Most people who lost their homes were those who could never have bought one before. Yes, the middle-class who borrowed more against their house were put under stress. Home equity loans dried up so industries like selling pianos dropped by more than 50% since people borrowed using home equity to fund expensive things like a piano.

Fed v Congress

Energizer-BunnyThe difference this time is the fiscal budget. Back in 2007, the Fed only had to worry about its policy and the contracting economy. The problem they created is that government just keeps going like the Energizer Pink Bunny – it never stops spending regardless of the level of interest rates.

The Fed cannot neutralize the Fiscal spending of government. This is deeply entrenched. Just look at the table below on the annual deficits since 2007. This has increased about 364% since the 2007 crisis began.

Government has become addicted to cheap interest rates. If rates go back just to 5%, we are looking at a fiscal deficit explosion the Fed cannot overcome.

US Deficits 2007-2016

The crisis has to hit before a politician would ever act. Once the crisis begins, you cannot restore confidence. The whole thing will have to play out. Moreover, the crisis in Europe helped to send capital to the USA easing the economic pressure here. This is why the USA is holding up the entire world economy right now and a stiff wind will blow over the European banking system. I seriously doubt that anyone can stop the next crisis and whatever they do will then be seen as a failure.

glassDuring the late 1970s, the IMF held gold auctions trying to stop its advance. The first auctions in 1975-1976 caused gold to drop by 50%. However, then continued auctions had no effect and they were seen as a validation of the bull market they could not prevent. We are looking at the same type of collapse in confidence this time around. The same fundamental act can have different interpretations. It is the glass half full or half empty.

The Euro for Month-End April 2017


IBEUUS-M 4-24-2017

The Euro turning point on our Weekly Models still points to the week of May 8th. As we can see technically, the Euro is well below the Monthly Downtrend Line which stands significantly above the market at 12622. There is no real chance of a reversal in the protracted long-term decline. We really need a Monthly Close above 11060 to signal a sustainable rally ahead and a closing for month-end beneath 10822 will warn that the Euro is still bearish in the broader term. Any rally into the week of May 8th should be sold whereas a decline into the week of May 8th will be followed by a minor relief bounce.

IBEUUS-W 4-26-2017

Turning to the weekly level, we can see the the Energy within this market has peak once again and is in danger of moving back into negative territory in the weeks ahead. We need a weekly closing on Friday above 10855 to raise hop of a rally into the week of May 8th. Therefore, this is becoming very narrowly focuses 10855 and 10822.

The Weekly Bearish lies at the 10715 level. Clearly, we do see a choppy trading people starting the week of May 8th. The computer has selected this weekly target months ago which is interesting how this falls into place with the May 7th French election.

Italy to Raise Taxes to Satisfy Brussels – Why the Euro Will Fail


Gentiloni Paolo

 

ItalyThe European Union (EU) has been pushing Italy for a very long time to reduce its deficit. Of course, governments are never capable of reducing their own expenditure. This results going in only one direction – raising taxes. Prime Minister Paolo Gentiloni had to agree on the concrete measures. The bill is now being discussed in Parliament, which has 60 days to pass. Italy has the second highest debt in the Eurozone after Greece.

This is why the EU is doomed. There will never be any reform that addresses the people. It is always about raising taxes to maintain government power and to hell with the people. The upcoming Germany vote still appears to be fragmented and as a result, Merkel may remain as Chancellor at the end of the day. We will have to run our models soon on the German election.

This is why I have warned that the Euro will fail. Had Brussels consolidated all the debts from the outset, then the Euro would have competed against the dollar. Leaving everyone to hold their own debts only created a single currency and then the fear that if one member expended their debt, it would impact everyone else.

This system is tearing Europe apart and unemployment in each country will turn to civil unrest and point the finger at Brussels. The debts should have been consolidated and the central bank would have then had a single bond issue for reserves. Now, the entire banking system has to be politically correct, owning a piece of everyone. Even the ECB has 40% of all government debt throughout the Eurozone.

It is beyond brain-dead to maintain this system demanding individual countries sacrifice their own domestic policy objectives for Brussels’ demands. In the USA, each state has its own agenda, but their debt is not acceptable as reserves for the banks. The Euro system is simply like being somehow half-pregnant.

The Gold Reports & the Building of Volatility the Precursor to Chaos


Volatility Historical

Our first report will be released on Gold, Guns & War which illustrates how gold has historically reacted to different types of war events, both internationally as well as domestically, as in civil unrest and revolution.  Illustrated here, we can see the historical volatility in gold over decades of interacting with the global economy and war. This chart shows how volatile the instrument is now in relation to a historical all time correlation.

We are witnessing the gradual rise in volatility since the 1999 lows. We are still nowhere near the sharp rise in volatility sparked by the collapse of Bretton Woods. Nevertheless, the timing is setting up on our volatility models for the future. Everything is lining up and we will be reviewing this at the Hong Kong WEC at the end of the month.

Trump Keeps His Pledge on Tax Reform


trump-cohen

TAX-REF (3)A lot of emails are coming in asking if I have been advising Trump on the taxes since this is similar to the plan I proposed when I testified before Congress. The answer is no. If they took the tax proposals we had worked on with members of Congress back in the Nineties, who knows. They are on file and have been endorsed by many different tax reform advocates.

I have not spoken with anyone in the White House regarding taxes. I testified why the corporate tax rate must be cut to 15% before the House Ways & Means Committee. The answer is very simple. Corporations will be taxed in their home country unless they pay some tax where they are domiciled overseas. Our headquarters back then was in Hong Kong. Everyone was there because of a 15% corporate tax rate. I testified if the USA lowered the corporate tax rate to 15%, then the USA would become the tax-haven and corporations would move to the States. This is a no brainer and was based on the fact that we did in fact advise multinational corporations – not just theory. I knew what they would do and would have advised them to move accordingly.

tax-cycThe biggest problem we face is this has to be made into a Constitutional Amendment. This is my ADVICE to Trump right now! Why, as soon as the cycle changes and the Democrats gain control, the taxes will rise again. This is why corporations level. We LACK TAX STABILITY. Taxes become a yo-yo  and business cannot plan long-term when the political atmosphere keeps changing between Marxism and a Free Market. This eternal battle destroys economic growth and has ruined jobs only to reduce the standard of living for the long run. A chart of the top tax brackets look like the brainwave of a schizophrenic.

Trump’s tax plan reduces seven tax brackets down to three. So it’s not the Flat Tax that Democrats will slam because the rich will keep more than they average person based solely on Marxism that discriminates freely against someone based upon their income. The first tax cut was JFK, the second was Reagan. This will be the biggest tax reform in US history. It does not go far enough, but it is the best we can do until there is a collapse in the monetary system that ends Marxism once and for all.

White House chief economic advisor Gary Cohn and Treasury Secretary Steven Mnuchin effectively summarized the plan to reporters. It reflects the proposal Trump outlined as a candidate keeping his word to his supporters. That in itself is really unusual for any candidate to do what they said during the election.

The tax rate on repatriation of trillions of dollars offshore is still being argued with Democrats, who never saw a $1 they did not want at least 50% of. The Death Tax has been devastating to small business and farmers. The next generation have been compelled to sell land, the farm or close the business to pay the estate taxes. This has wiped out small farms and resulted in big corporate America producing food as small farmers were forced to sell because of taxes. Likewise, if a small business sees its owner die, the family has been forced to shut it down. This was one primary reason I have been saying we will go public or else if I died, the taxes owed for my death would result in job losses for staff. Going public was the only way to get around this to ensure the company continues. So these changes will be beneficial for the economy and this may be one of the reasons why the stock market still looks like it will double in value into the years ahead after we get past 2017 this year from Political Hell.

  • Trump’s plan will cut the number of income tax brackets from seven to three, with a top rate of 35 percent and lower rates of 25 percent and 10 percent. It is not clear what income ranges will fall under those brackets. It would also double the standard deduction.
  • The proposal will chop the corporate tax rate to 15 percent from 35 percent.
  • It would eliminate tax deductions with only a few exceptions, including the mortgage interest and charitable contribution deductions.
  • The White House said there will be a “one-time tax” on the trillions of dollars held by corporations overseas. However, Mnuchin said the rate for that tax has yet to be determined. Mnuchin said the White House is “working with the House and Senate” on a repatriation rate, saying it would be “very competitive.”
  • The plan would get rid of the estate tax, otherwise known as the “death tax.” Cohn said that the move will help privately-held businesses and American farmers. Analysis of the estate tax reveals that it affects only a very small portion of Americans.
  • Mnuchin also said the U.S. would go to a “territorial” tax system. Though further details were not forthcoming, such systems typically exclude most or all of the income that businesses earn overseas.
  • Trump’s plan would also repeal the alternative minimum tax and 3.8 percent Obamacare taxes.

London Property Sales Crashed 40% Thanks to Tax Increase


62 Cornall Gardens

Where I use to live back in 1985

George Osborne budgetThe London housing market sales has crashed to its lowest level now since 2013. We reported in November 2015 with the turn in the ECM on 2015.75 that the London property market peaked. Valued crashed by 11.5% in the first month after the turn of the ECM. Landlords are joining together to challenge the Conservative’s (i.e. Tory’s) tax hike by filing a suit in the high court against their tax increase on “buy-to-let” investment properties.  In July 2015, we warned that the Conservatives were going after the non-domiciled residents in London and that would stop the real estate boom.

The figures are now out and they show that the number of homes bought over the last year crashed by 40% between March 2017 and March 2016, from 173,860 to 102,810. “That was thanks to new stamp duty rules introduced at the beginning of last April, which hiked stamp duty on second homes and led to a buying frenzy just before the rules were introduced,” reported Emma Haslett.

Keep in mind that we are only human. Consequently, if you see municipal taxes rising in the USA, expect property values to also decline. It is the same worldwide.