This news should be priced in for the most part, and should not be cause for some huge new rally. It does, however, remove a potential stumbling block to the rise in equities.
In other news, Moody's downgrades Ireland's bond ratings five notches from Aa2 to Baa1.
In other news, Moody's downgrades Ireland's bond ratings five notches from Aa2 to Baa1.
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I suspect that there will be a sell off for 2 reasons.
ReplyDeletea. Buy the rumor, sell the fact.
b. With the passage of the tax bill it now makes sense to take your capital losses in 2010 and defer your capital gains until 2011. Without the extension of the tax cuts it would have been stupid to take your losses against a 15% tax rate when you could wait a couple of weeks and take them against a 39.6% tax rate.
"Investment taxes: The bill extends for two years the current tax rates on long-term capital gains and dividends. The top rate for both will remain at its historic low of 15%. The rate will remain zero for couples with taxable income below $69,000.
ReplyDeleteAccording to the Tax Policy Center, more than half of the benefit of this extension will go to people with incomes above $100,000. Absent the extension, the top rate on long-term gains would have risen to 20%, while the top dividend rate could have risen to as high as 39.6%."
http://online.wsj.com/article/SB10001424052748704073804576023842991850786.html
Parker, I am posting a question for you on bonds here because the other blog is full of comments. The TLT appears to have completed five waves down, so the rebound could bounce .38 to .5 of the decline. I am not sure how MFI works on one that has been declining for weeks. Thanks for any help.
ReplyDelete