In Goldman Sach’s Whitehouse Update I: Pre-Stock Market Crash Treasury Secretary “Moe” Mnuchin threatened that the stock market would crash if his tax cuts for the Super Rich did not get passed. Shockingly, the Republican’s passed the tax cuts. Okay, it was not shocking and the market did not crash back then.
A short review from last year’s messaging out of the Goldman Whitehouse”
- The wealthy are not getting a tax cut under our plan
- Okay, it is hard not to cut the wealthy’s taxes
- Okay, okay most of the tax cuts are going to the wealthy
- And overseas cash tax repatriations will be invested in US jobs
The stock market was of course emboldened by knowledge that CEOs have never wasted their overseas cash tax repatriations on investing in their businesses or funding company pension funds, but instead prefer to destroy their company balance sheet boosting their stock-option linked pay on corporate buybacks.
Others don’t agree with this wall street enriching policy.
Florida GOP Senator Marco Rubio said on Twitter last week that the tax code shouldn’t encourage buybacks.”When[a]corporation uses profits for stock buy back it’s deciding that returning capital to shareholders is better for business than investing in their products or workers,” Rubio said. “No surprise we have work life that is unstable & low paying.”
I’ll agree with Rubio on this one.
So now as the buybacks begin to fade and interest rates are set to exceed inflation for the first time after 10 years of emergency monetary policy, the stock market is toying with the idea of returning to free-market price discovery…
…to the dismay of those on wall street who think the Fed’s job is to never let the stock market go down.
Which leads to the new line of messaging coming out of the Goldman Whitehouse. Treasury Secretary “Moe” Mnuchin tells us today…
- U.S. equities are a tremendous value
- The stock market’s plunge after the rate hike announced by Federal Reserve Chairman Jerome Powell was “completely overblown.”
We will check in next year to see how this opinion works out.
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