JPM on macro) The desk flows have been calm and orderly Mon/Tues although its a testament to the current psychological/positioning backdrop that investors these last several weeks get more anxious when the SPX moves closer to 2400 than they are do when the index appears headed towards 2300 (i.e. the consensus seems to anticipate a market that continues to at best move sideways and thus signs of fresh highs in the SPX is definitely sowing concern). Despite the solid CQ1 earnings season and a favorable outcome in France it doesn’t seem like the SPX can surmount 2400 at this time.
(JPM on today’s release of Trump tax plan) Trump will propose cutting the corporate rate and “pass-through” rate to 15% (from 35% and 39.6% now, respectively) and the repatriation rate to 10% (from 35%) while raising significantly the standard deduction for individual filers (which will have the effect of dramatically cutting individual rates). There are proposals being worked on for deducting child care costs but these won’t be ready for Wed. Trump’s plan won’t contain any large revenue raisers (there won’t be a BAT) and thus the conversation has shifted very much away from “tax reform” and towards “tax cuts”. Needless to say the blueprint would dramatically expand the deficit although WH/Treasury officials are expressing confidence in “dynamic scoring” (i.e. the belief that higher growth will more than pay for the lower tax rates). It will be virtually impossible to pass through Congress.
(WSJ) Stephen Moore has an editorial in the WSJ (“growth can solve the debt dilemma”) where he calls for a return to ‘90s-like growth. It doesn’t appear realistic given present labor supply/productivity trends (the ‘90s was an extraordinarily unique period of time that is very unlikely to repeat).
(WSJ) Some economists and real-estate brokers are growing increasingly worried that the US housing market could be overheating.
(Bloomberg) Banks are getting serious about moving headcount to Frankfurt after last year’s Brexit vote.