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And now some Trump tax plan winners: If you aren’t psyched about stock trading this coming week then maybe it’s time to reassess why you play the market in the first place. Volatility will likely continue to pick up as investors sift through the just approved Senate tax bill. Indeed what looks to be Trump’s first big win in the Oval Office has several goodies for the investing public. The first is the most obvious: a corporate tax rate cut to 20% from 35%. Under the Senate’s plan, the new tax rate would hit in 2019 (House bill has it in 2018). While the popular choice is to say Apple (AAPL) is an instant winner, allow me to be more creative here. Banks are going to clean up, for several reasons. With Corporate America about to see a profit boost from lower taxes, a new wave of M&A activity will probably commence. Who makes gobs of money off of that other than golden parachute wearing CEOs? The investment banking teams over at Goldman Sachs (GS) , JPMorgan & Chase (JPM) , Morgan Stanley (MS) and Citigroup (C) . Further, with economic growth picking up amid the adrenaline shot of corporate tax reform, the Jerome Powell led Fed is likely to hike interest rates even faster. Higher interest rates = fatter net profit margins for banks. Can you say EXPLOSIVE profits!?
…And some losers: Unfortunately, Trump’s tax plan doesn’t make every company in Corporate America instant winners. Under the tax bill’s current structure, many households will be pushed out of itemizing deductions come April. In turn, that would lower the incentive to deduct mortgage interest. Homebuilders such as KB Home (KBH) , Lennar (LEN) and Hovanian (HOV) , which focus more on homes for middle America (Toll Brothers (TOL) does luxury homes), could see fewer people wanting to buy a home or buying something with fewer bells and whistles. Also not helping homebuilders is the quicker pace of interest rate hikes from the Fed likely to happen as they try to get out in front of tax cut fueled inflation. Oof.
Stocks…stocks…STOCKS: Let this be the weekend of stock ideas from yours truly. Hey, with the Dow poised to hit 30,000 in 2018 why not toss a few darts. One sector to toss those darts should be in the industrial sector, points out TheStreet’s Kinsey Grant. The sector has under-performed the broader S&P 500 by 400 basis points over the past year, even as global GDP growth has surprised to the upside. But with tax cuts set to unleash a capital expenditure spending boom, industrials stand to come into favor among investors. Time to scale back on that Facebook (FB) …and believe it or not nibble at something like beat-up General Electric (GE) .
Come On John Cena
Ford (F) has filed a case in U.S. District Court in Michigan against WWE (WWE) superstar John Cena. According to the complaint, Ford says Cena promised to keep his new $463,376 Ford GT for at least two years. Cena apparently flipped the car shortly after delivery for a profit. Tisk tisk Mr. Cena — Ford handpicked the first 500 people to get the car (one car went to former Ford CEO Mark Fields and another to chairman Bill Ford) in order to protect the car’s value.
No word on if Fields has sold his ride. I still have mine (see above video).
Apple, Citigroup, Facebook and General Electric are holdings in Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL, C, FB or GE? Learn more now.
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