Quick Reminder: Earnings Need Trump’s “Phenomenal Tax Cut” Or The Market Crashes

Posted by on May 10, 2017 12:25 pm
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Categories: Individual Stocks Stock Market

While we applaud President Trump for finally firing FBI Director Comey, Trump Throws Out Bum Comey, the above might be terrible news for the stock market.

Why?

The Comey firing will delay Trump’s tax cuts

And without tax cuts corporate earnings are at the end of their rope.

As we have discussed so many times before, most growth off of 2009 bottom has been driven by QE, zero interest rates, stock buybacks and general economic growth caused by stimulus.

Take this stimulus away and earnings collapse. Simply put, the US Economy and markets need yet another stimulus shot just to keep going. This shot was touted as Trump’s “Phenomenal Tax Cut”, leading to a post election rally in stocks. Take it away and stocks should collapse.

We are already beginning to see evidence of that with numerous companies missing their targets and lowering forward guidance. For instance, IBM just missed and is down 5% in the afterhours IBM posts first revenue miss in five quarters, shares tumble

Our view remains the same……

Not a good sign when the stock market is selling at the second highest valuation in history. 

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