Yes, I got the license plate number of that truck that hit the market: J.E.N.P.S.K.A.I.
Stocks opened mixed yesterday with cyclical names, particularly banks, powering the Dow Jones Industrial Average higher, and growth names dragged the NASDAQ Composite lower. The S&P was down, but nothing to panic about, as four sectors were solidly higher.
The real carnage, however, came around 1:50 pm, when Jen Psaki, White House Press Secretary, indirectly confirmed the White House is planning on increasing the tax rate on individuals making less than $400,000, breaking a key campaign pledge. Psaki tried to play it off, saying it would only impact 2% of taxpayers, but the market was flattened, as there was a race for the exits. Major equity indices were slammed and closed at the low of the session.
I do not care what your politics are. The fact is President Biden pledged no one making less than $400,000 a year would see their taxes hiked. I am beside myself over this because the net is going to snare so many small businesses and upper middle-class folks that just arrived after years of toil and hard work.
Folks who make less than $400,000 are NOT millionaires. It is an affront to the promise of the freedom to pursue the American Dream.
During the election, there was a rumor of a major tax hike being made retroactive, but everyone blew that off as nonsense. And yet, after the bait and switch move, the administration will have to be viewed through a lens of skepticism about taxes.
What’s really nuts is to promote a rescue package using the urgency of the moment, then assume the coast is clear for a massive tax hike that would slow the economy. If President Biden were a comedian, I would say ‘you’re stepping on your lines.’
But then again, there is nothing to laugh about no matter how the news is delivered. The campaign promise was simply not true. I’m told the tax on households was in some of the campaign literature. It sounds like the excuse Robinhood used to slam investors when they were not allowed to purchase GameStop (GME) and other stocks.
I hope the White House reconsiders their ambitious tax plans in general and certainly holds the line at $400,000 per individual – as promised a million times.
Market Breadth
It was ugly. The only good news is the volume was light for a session under so much pressure.
Market Breadth | NYSE | NASDAQ |
Advancing | 684 | 914 |
Declining | 2,631 | 3,207 |
52 Week High | 336 | 270 |
52 Week Low | 33 | 74 |
Up Volume | 1.30B | 1.20B |
Down Volume | 3.39B | 4.19B |
Crude Awakening
It wasn’t just stocks. Crude oil was leaking for several days, and the bottom fell out yesterday. It was a combination of an inventory build, slower than anticipated global recovery, and being overbought.
Also, in this environment, when hot assets turn cold – they turn cold as a stone - and can drop like a rock.
West Texas Intermediate (WTI)
Portfolio Approach
We made no change to the Hotline Model Portfolio.
Money Continues to Pour into the Stock Market, and this money has to go to work. Keep that in mind.
To see the chart, click here.
Today’s Session
Futures were relatively flat but now the markets are under pressure again after yesterday’s drubbing. The 10-year Treasury is up this morning to 1.74%. The Fed is going to let temporary change to the supplementary leverage ratio (SLR), which it issued on March 15, 2020, expire as planned on March 31.
Oil is continuing is retreat, down slightly to $59.91 but off its worse levels.