Good Morning Everyone!

It's been a wonderful week for markets and a busy one for me. If you haven't yet had an opportunity to check out my podcast with MacTheVC, click here, I'd love to hear your thoughts, comments and feedback.

Now onto your weekly preview in five.

 

Dow Jones	33,761.05	-7.09%
S&P 500	4,280.15	-10.20%
Nasdaq	13,047.19	-16.60%
Rusell 2000	2,016.62	-10.19%

 

1. US markets are surging once again. The S&P 500 is on a four-week winning streak and has gained 16.7% since bottoming out a month ago. The Dow has gained 13% in that time, and the Nasdaq has gained 22.6%. Last week's lower-than-expected CPI figures seem to have revived investors, and the positive momentum is expected to continue. Keep dollar cost averaging into the S&P 500.
2. The Inflation Reduction Act has passed. An additional $430B is now being put into healthcare and climate initiatives. Energy has always created generational wealth; the Wurt brothers made billions on coal in the 1800s and Rockefeller in the 1900s. With the amount of government funding for renewable energy, stocks will surge. Energy is reliable; ride the government-backed renewables surge.
3. Oil prices are high, and idiots are buying. You're smarter than that; oil demand has fallen 7% from last year. Government stockpiles are increasing. Prices may be high, but demand isn't there. Don't follow the herd.

The Biden Administration has checked off a significant part of its agenda; raising corporate taxes. The campaign promise was to increase taxes from 21% to 28%; this would have added ~$70B in revenues. When he realized that couldn't be done, the promise was a rise from 21% to 25% to add ~$50B in revenues; this failed as well, so instead, we have a 15% minimum tax and a 1% excise tax on dividend buybacks.

 

The 1% tax on dividend buybacks isn't significant. Buybacks are one of two ways to return funds to shareholders; more companies will not just pay dividends instead.

 

The US had a minimum corporate tax in the 1980s that was abandoned after a few years since it was too difficult to monitor and enforce and was overly complicated. In short, if you don't know how it works, corporate tax is 21%, tax deductions like R&D rebates, hiring incentives, etc. can cause companies to pay less than 21%, and the minimum tax says that if your tax rebates take you below 15%, you still need to pay that 15%. It's a messy way of overriding tax rebates when companies use them too well.

 

The tax will add about ~$45B in new revenues, which is less than any other proposal by Biden and will likely encourage more companies to move profits overseas.

It's been a rough week; busy at the law firm, and I've not had enough time to spend on my own businesses. I've realized that to accomplish all my goals; I need to stick to my routines and keep my structure in place.

SALES! It keeps getting pushed off, but these newsletters need sponsors.

I hope you all have a wonderful week. I love chatting with you, so please reach out here or on Twitter. Let me know what knowledge, information or insights I can share or tell me what you like/dislike about my work!

 

Onward and Upward!

 

This newsletter is not legal, financial, or tax advice. Please We consult an attorney before making any legal decisions, financial advisor before making investment decisions and tax specialist for any tax matters. I make no representations and take no responsibility for your actions based on this information.

© Liam Gill 2022

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