While you are watching these impeachment hearings, just remember that those that are asking questions from both sides of the aisle are all culpable in taking us to $23 trillion of debt and $1 trillion yearly deficits. The first $500 billion of OUR tax dollars are going towards interest this year on all that debt they have created but don’t worry because economists say it is the percent of debt to GDP that matters. Yup!
Bet you haven’t heard much about the MILLIONAIRES SURTAX ACT. Last week, Maryland senator Chris Van Hollen and Virginia Congressman Don Beyer unveiled it. The bill puts an extra 10% tax on individual income above $1 million or $2 million for married couples. This tax would apply to all income, including long term capital gains. Right now, no chance of passing but important to remember where they will go if they gain full power. This is just a shot across the bow. Looks like $4.5 trillion of spending is just not enough.
For the past week, we have told you that all our sentiment indicators are bright red bullish. This usually leads to some downside corrective work because the masses were all in on a near-term basis. Keep in mind, this will not turn a bull into a bear but corrections serve to work off near term excitement and frothiness. Putting doubt back in the market is not a bad thing. We think there is a shot we are now getting some of that stalling action that could lead to some near-term weakness. Leading groups, FINANCIALS and SEMICONDUCTORS are quite extended and could use some pulling in. Again, we think any pullback at this juncture would be just that. But…
Keep in mind, Ben Bernanke, we mean Jay Powell, is providing more liquidity to the system than Bernanke did when we were at 9% unemployment and the economy was in the crapper. Of course, it is QE but not QE. This kind of liquidity has been great for markets both here and around the globe since the lows of 09. We laugh when we hear fedheads talk about sitting pat on lowering rates again when what they are doing is easy money on steroids.