Nomura lowers odds of ‘comprehensive reform’ but still sees 60% chance of ‘simple tax cuts’
The president and congressional Republicans took a few victory laps after unveiling a long-awaited tax-cut plan Thursday, but investors and analysts argue that it’s far too early to pop the champagne corks.
“That they have some terms on the table is a step in the right direction, but other than repatriation and a reduction in corporate taxes, everything else is up for negotiation,” said Bob Doll, chief equity strategist at Nuveen Asset Management, in a phone interview Friday. “I think the market is saying, ‘they’re making progress, but I want to see the final bill before I do anything.’”
The House plan would cut the corporate tax rate to 20% from 35%. It also includes a lower, but mandatory, tax on offshore earnings designed to encourage companies to bring home a chunk of the more than $1.3 trillion they’re estimated to have parked overseas.
On the individual side, the plan would compress the number of income tax brackets and fully repeal the estate tax by 2024.
Stocks put in a mixed performance Thursday in the wake of the unveiling. On Friday, the S&P 500 SPX, +0.31% Dow industrials DJIA, +0.10% and Nasdaq CompositeCOMP, +0.74% all ticked up to record closes following another round of strong corporate earnings and a strong reading from a gauge of service-sector activity.
Meanwhile, the rollout saw a mixed reception from business groups, drawing criticism…Read More