US senate passed the tac bill, House to revote
Donald Trump may be able to sign the most radical tax overhaul in a generation
The size of the fiscal injection does matter
Republican’s Tax overhaul bill encountered another procedural snag and it must have made Mr Trump cringe who is aching to get this bill over the line before Christmas. However, the Grinch effects are more empowering. The US Senate had to vote again after making the relative minor provisions and the ball is once again in the House’s court. Perhaps, Donald Trump may be able to sign the most radical tax overhaul in a generation. Signing the tax overhaul bill will give Trump some credibility after a massive failure to repeal the Obama healthcare bill
The tax overhaul bill is supposed to provide a massive kick for the US economy to energise once again (as Republicans claim that $1.5 trillion would encourage the corporation to spend more). Nonetheless, we do not expect the markets to move massively up when the Senate revotes and passes the bill because traders have already priced this in. In fact, buy the rumour and sell the fact could be the trade when Trump signs the tax overhaul bill. Having said that, the size of this fiscal injection does matter and it provokes traders to rekindle their expectations of US interest rate in 2018 when unemployment is already at all-time low and economic growth is flirting with a level of 2.5%.
European markets are picking up the momentum from Wall Street where most indices dipped in the negative territory. Given the massive gains we have experienced throughout this year, it would be normal for traders to take some chips off the table in order for them to celebrate the festive season.
The British pound may not be impacted much by the Brexit negotiations process as we do not expect any big news to lateralise until next year. Therefore, the economic data remains the key denominator. The CBI manufacturing data released yesterday confirmed that manufacturing sector’s health isn’t ill. However, the higher CPI numbers are squeezing consumers the feeble wage growth isn’t providing any aid. The upcoming CBI retail sales number would be particularly intriguing as investors will try to connect the dots because according to last week’s retail sales number, things aren’t that worse.
