As the market continues to crater, we are not sure who is more delusional: The chart-monkeys clinging to their DMAs and Fibonacci pivots or the true believers who think that the fiscal abomination known as the Christmas Eve Tax Cut will actually forestall the next recession and stimulate the current aging business cycle into permanent paroxysms of growth.
At the end of the day, however, chart-monkeys loose when the Bubble Finance party ends because momentum trading always succumbs to the fundamentals. So the real danger at the moment is the wrong-headed belief on Wall Street that the Trump/GOP tax cut was actually some kind of economic and profits elixir.
In truth, however, it was nothing of the kind. The so-called Tax Cut and Jobs Act was actually a fiscal, economic and political monstrosity. It was hands down the worst tax bill enacted in the last half-century—-maybe even since FDR’s 1937 soak-the-rich scheme, which re-ignited the Great Depression.
True, rather than soak them, the GOP’s bill will pleasure America’s wealthy with a bountiful harvest of tax relief. Owners of public equities, for example, are garnering an estimated $1.3 trillion dollar shower of stock buybacks fueled by the corporate rate cut to 21%, and also massive dividend increases on top of that.
So in honor of the Christmas Eve Tax Cut of 2017 you could hand out some red baseball caps labeled, Making Wall Street Giddy Again (MWGA) and be done with it.