it looks like the Trump trade is back on
because of a tax proposal that is we're
expected to see on Monday which should
lay out the specifications for a
corporate tax cut Trump has been talking
about a federal corporate tax cut from
35 percent to 15 percent since 2015 JP
Morgan's head of equity strategy says as
long as headlines continue to indicate
political traction we believe investors
are likely to start pricing and higher
probability of tax reform and if you
look at the goldman sachs basket of
stocks that are most likely to benefit
from a tax cut you'll see that they
outperform the broader market right when
Trump was elected and then started to
corrects but over the last few weeks
these tacks have started to outperform
again on optimism for a tax cut so how
much of a boost could this give stocks
according to JP Morgan cutting the tax
rate from 35% to 25% could increase S&P
500 earnings by 11 dollars per share
bringing it up to a hundred and forty
three dollars per share which would
increase the index a hundred and fifty
points at the current multiple gym fabio
senior vice president of government
relations for a fidelity investment
points out that before tax reform can
advance Congress needs to pass a budget
for 2018 to provide the protected
vehicle known as Budget Reconciliation
which would allow tax reform to pass the
Senate with only 51 votes which means
that political pressure to get tax
reform could actually help us agree on a
budget but as fidelity investments
jurrien timmer points out most long-term
investors shouldn't react to short-term
events and that's today's bottom line
as the Chicago Booth alum I consider
myself very lucky to have had the
opportunity to interview Luigi Zingales
of Chicago Booth about his new research
which challenges some of Milton
Freeman's assumptions about maximizing
shareholder value
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