The market...
Trannies ended the week lower (first down-week in 7 weeks), Dow outperformed on the week (4th week up in a row)... The S&P record-high streak is over...
While many US companies, especially those in the Russell 2000, have seen their stocks surge in recent days on renewed hopes that Trump tax reform may pass in the coming months (Goldman assigned a 65% probability of Trump tax passing), the reality is that for a vast majority of US corporations a tax cut to 30% or even 25% will have little marginal impact: after all, while US companies may have some the highest statutory tax rate in the world...
... the effective tax rate of the median S&P 500 company is 12% below the statutory rate, or roughly 27%:
No, it's not a trick question...
Despite tumbling fundamentals...
And being the most overbought in 20 years...
Many investors continue to pile into Small Cap stocks in the hope that Trump Tax reform will save the world.
"I want it all... and I want it now...!!!"
Credit spreads have collapsed in recent weeks - back to post-crisis lows...
Just relax...
As Bloomberg noted, stocks and bonds managed gains despite talk that tax reform may face insurmountable hurdles in the U.S. Senate.