The WSJ opined the Biden Administration is “going after the mother of all tax hikes.”    The Administration is proposing to increase taxes on income, capital gains, corporate taxes, inheritance and if these proposals are passed coupled with state taxes, some individuals could be in a tax bracket in excess of 80%.

It could be argued the country has had a 90% tax rate but such was for a short period of time and the policy was riddled with loopholes to lower the effective rate.  According to the WSJ such loopholes would be nonexistent.

Like most I don’t think such proposals will be passed but it further demonstrates the progressiveness of this Administration.

It is very widely accepted government is worst steward of monies for the profit motive is entirely absent.  It is OPM…”Other people’s money.”

Changing topics, but just as damaging as astronomical tax rates, former Treasury Secretary Summers predicted inflation will be running “pretty close” to 5% at the end of this year and that bond yields will likely rise over the rest of 2021.

Summers who is an outspoken high-profile Democratic economist, has repeatedly predicted massive monetary and fiscal stimulus alongside the reopening of the economy would spark considerable price pressures.  Some in the Democratic party has dismissed his concerns under the simple guise that he is just whining because he is not part of the Administration.

As noted several times, however, there is a litany of Democratic economists and iconic financial professionals [most iconic financial professionals are strong supporters of the Democratic party] that are openly questioning the inflationary implications of both monetary and fiscal policy.

Commenting about Friday’s markets equities were bifurcated as value…aka the reopening/reflationary trade…vastly outperformed growth.

Some pointed to the sell off in Treasuries as the catalyst.  Others inflation.  While others potential tax policy.  I think it was all of the above.

The economic calendar is crowded.  There are a host of manufacturing indices including the top tier ISM, several sentiment indicators and the various labor reports concluding with Friday’s release of June’s unemployment data.  How will this deluge of data impact psychology?

Last night the foreign markets were down.   London was down 0.50%, Paris down 0.50% and Frankfurt down 0.11%.  China was down 0.03%, Japan down 0.06%, and Hang Seng down 0.07%.

The Dow should open nominally lower.  The 10-year is up 5/32 to yield 1.51%.


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