This has been a big week for news, here are a few items of interest.
Democrat controlled Congress passed the wrongly named Inflation Reduction Act of just over one trillion dollars.
Provisions include:
- A new alternative minimum tax called a corporate book tax of 15% for companies in the billion dollar league. It is not indexed for inflation so more companies will be affected in the future. This will supposedly raise $ 313 billion but really moves it from the private to government controlled spending.
- A 1% tax on stock buybacks. This will likely reduce returns to shareholders.
- Price caps on Medicare drug costs. But the drug companies will have to make this up elsewhere by raising prices for everyone else.
- 87,000 new IRS agents ($80 billion). This supposedly will raise revenue (pick a number in the billions).
- Did you know the IRS has purchased 5 million rounds of ammunition? This includes shotgun, pistol, and rifle ammunition.
- Wiped off the site now but the IRS stipulated that the job would include “carrying a firearm and be willing to use deadly force if necessary.” What would necessitate that during a compliance audit?
- Did you know the IRS agents union has a Political Action Committee? All funds have gone to the Democrat party. Now the new 87,000 agents will add to the dues for the PAC shoveled directly to the Democrat party that passed the legislation, clever eh?
Now connect the dots. FBI agents performed a raid (a search in MSNBC speak) of Trump’s Florida home while he was out of town. They arrived well- armed. Can there be a portent of things to come for the rest of us, armed IRS agents?
And in other news, Paul Pelosi Jr accompanied Mom Nancy on the Asia Trip. Despite China’s military blustering, Paul Jr is the second largest investor in a Chinese Company. Her husband purchased stock in chip makers shortly before the Chip Bill passed this Congress.
Political polarization in 1973-74 eventually cut the stock market value in half. The NASD fell 31% in the first half of this year and has now rebounded 20%. The Dow Industrials hit resistance around our prediction of 33,250 mid-month. I expect a pull back and then additional rally into mid-September.
Crude Oil has rallied back to $90 and has not hit the lower $80 range as expected. Natural gas has rallied back to the $8 area. Russia is only supplying 20% of its pipeline potential to Europe. No wonder prices have remained high.
The highs expected for stocks in mid-September represent an important cluster of cycle termination. The ensuing drop could be severe.
