TAX

Liberty Tax Cl A

Washington

The Trump Tax Cut Is in Full Swing - but These Debts Don't Look Good

Tax collections fell in June as the Trump tax cut continued to bite into federal revenues. The fall in tax collections, combined with the rise in spending stemming from the congressional budget-busting agreement signed by Trump, is causing an increase in the government's issuance of Treasury bills, notes, and bonds, month in and month out.

That increase in supply puts downward pressure on bond prices and increases in interest rates and bond yields. It isn't obvious in the bond market at the moment, since the 10-year yield has traded in a tight range around the 2.80s. But short-term T-bill rates are soaring, with the 13-week bill hitting 2% last week.

Meanwhile, increased debt-financed deficits have kept the U.S. economy running hot, but there are hints of slowing in current data. That's not supposed to happen. Tax cuts and deficit spending are supposed to stimulate spending.

Read on for my unvarnished, unmanipulated, real-time view of the state of the U.S. economy...

Economic Data

Trump's Tax Cuts Are "Hiding" This Critical Stock Prediction

Federal tax collections data gives us a leg up on the market because it tells us what to expect when the lagging economic data indicators are released later. That puts us ahead of the crowd, which is waiting for biased Wall Street pundits to interpret already stale, manipulated data when it's finally released. Meanwhile we already know what the facts are.

Tax data has told us whether the lagging economic indicators are promoting a false narrative. Thanks to statistically massaged data and deliberate or unknowing misinterpretation by the talking heads, that can go on for months. But we know the facts.

More importantly perhaps, the tax data has told us what the Fed will be seeing when it gets the lagging economic data. That helped us to know whether incoming economic data will keep the Fed on track or not.

Now, however, the picture has gotten fuzzy. The big tax cuts enacted into law at the end of 2017 have begun to impact tax collections. That makes it virtually impossible to analyze year-to-year changes on a like-versus-like basis. It will be several months, and perhaps the whole year, before we can make these year-to-year comparisons in a way that reflects the actual trend of the U.S. economy.

In other words, Trump's tax cuts are hiding the "big picture" right now when it comes to market predictions.

But fortunately, there's another "bonus" indicator that tells us what's going on...

Trading Strategies

Why I'm a Raging Bull on Trump's Tax Cuts

Lee Adler might be right about many things, but he's wrong about Trump's tax cuts.

We had gotten into (in his own words) "a vigorous conversation" about the impact of U.S. President Donald Trump's tax cuts on the markets at an incredibly fabulous holiday party attended by a bevy of beauties and Wall Street legends.

Subsequently, in Sure Money, one of Lee's readers, Jesse, wrote: "Hi Lee. Enjoy your articles. Your views about tax cuts and the market still tanking seem to conflict with what Shah Gilani says. Can you expound on how a tax cut will be bearish?"

I'm on record saying that tax cuts will boost the economy and drive markets higher. For argument's sake, I told FOX Business Network's "Varney & Co." host Stuart Varney the market will double in five years or less.

Here's why I'll be proven right (while making a ton of money in the process)...

Trading Strategies

Why I'm Bearish on Trump's Tax Cuts

I recently enjoyed a holiday party with my colleagues at Money Map Press, one highlight of which was a vigorous conversation with Shah Gilani about the impact of Trump's tax cuts on the markets. I have deep respect for Shah's analysis (and his excellent track record). He actually has an uncanny knack for finding bearish trades in a bullish climate, which the contrarian in me appreciates, and his writing is always incisive and entertaining.

However, on this issue, he is a confirmed bull, while I am a confirmed bear.

We enjoyed our argument immensely.

Then – after taking a bit of a break for some eggnog – I visited my comments section on Sure Money.

Lo and behold, a smart reader named Jesse had asked me the very same question...