Much Ado About Nothing.

Thursday was much ado about nothing, or at least that’s what it felt like. We got the tax plan and we got Powell, but we didn’t much in the way of fireworks.

Here’s Powell promising not screw up with Trump standing in the background nodding and quite clearly thinking about something that isn’t monetary policy:

And rewinding to the moments before that, here’s Trump making the announcement:

He also thanked Yellen without mentioning all of the things he’s said about her before, but that’s ok, because we can tell you what it would have sounded like if he had:

We also got the tax “plan” on Thursday. It proposes lowering the corporate tax rate to 20%, but you already know that. Here’s a summary from NY Times (more here) for those who were lucky enough to miss it:

  • The plan establishes three tax brackets, 12, 25 and 35 percent, and also keeps a top rate of 39.6 percent for the highest-earners, collapsing the total number of brackets from seven.
  • The proposal roughly doubles the standard deduction for middle-class families, expanding it to $24,000 for married couples, from $12,700, and setting it at $12,000 for individuals, from $6,530 today.
  • After much nail-biting debate, the House will not make any changes to the pretax treatment of 401(k) plans.
  • One of the biggest flash points will be proposed changes to the popular mortgage interest deduction. Under the Republican plan, existing homeowners can keep the deduction, but future purchases will be capped at $500,000.
  • Estate tax eventually repealed, phasing it out entirely in six years.
  • One of the biggest flash points will be how the bill treats the state and local tax deduction, which lawmakers are proposing to limit to property taxes and cap at $10,000. That will not be enough for Republicans in some high-tax states, where middle-class families make heavy use of the deduction.

The Dow closed at a record and small caps did ok. S&P and Nasdaq were flat and the VIX, after spiking briefly, was back in the single-digits:

StocksVIX

The dollar and yields fell early, but the greenback got some traction despite dim hopes of actually passing the tax bill in its current form. Powell’s appointment was expected, so not much there either:

DollarYields

This is now a standing joke (flattest since 2007 – again):

5s30s

Horrible day for Tesla (jitters about the quarter and then the electric vehicle tax credit ending):

TSLA

Dovish hike from the BoE deep-sixed the pound (one and done) and buoyed the FTSE which bucked the trend in Europe to close notably higher:

FTSEPound

In a true testament to how the market interpreted this, five-year gilt yields fell the most since the BoE cut rates in August 2016 following Brexit:

Uk5Y

Bitcoin staged a hilarious rally above $7,000 this morning, in another step towards obviating the need for John McAfee to “eat his own dick on national television”, but this is Bitcoin we’re talking about, so it promptly careened back lower. Here’s how a speculative “asset” trades:

Bitcoin

In short: folks are super-excited about the prospect of the CME launching futures on this incredible piece of make-believe shit. Meanwhile, Fundstrat’s Tom Lee (who is described as a “hyper-bull” and who has called for the cryptocurrency to hit $25,000 by 2022), is now cautious, recommending buying in the $5,500 “range”.

Finally, don’t forget to what you owe your good fortune:

QE

And with that, I’m sick of Thursday and ready to write about something that’s fun and entertaining, so down goes the curtain on today’s market wrap.

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