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Tax Cuts and Rate Hikes: A New Chapter

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Tax Cuts and Rate Hikes: A New Chapter PART 1 OF 6

Is a Trump Rally 2.0 in the Cards?

Rate cuts

In a surprise turn of events, President Trump lifted investors’ hopes with his comments on tax cuts. On Wednesday, he hosted a roundtable with lawmakers to discuss tax and infrastructure reforms. These comments came as markets were starting to doubt if Trump’s rate hike promise would ever see the light of day, reviving hopes.

Is a Trump Rally 2.0 in the Cards?

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Will this new law be a possibility?

In recent months, the Trump administration has been struggling to pass any new reforms. The healthcare bill couldn’t garner enough support even from the Republican Party. Will tax reforms meet the same fate?

That’s a tough question to answer, but the odds remain in favor of the bill passing. With mid-term elections scheduled for next year, chances are that Republicans would support tax reform.

Will this new development lead to a Trump Rally 2.0?

Many risks that were hurting market confidence at the beginning of September have now subsided, and volatility (VXX) in markets has dropped. North Korea’s nuclear scare isn’t as much of a discussion point, President Trump made a surprise deal with the Democrats, and hurricanes Harvey and Irma are behind us. There are already enough reasons for the markets (QQQ) to recover from the recent blip, and the possibility of tax cuts could excite investors.

In the remaining parts of this series, we’ll discuss the implications of any tax cuts and how the equity (SPY), currency (UUP), and fixed income (BND) markets have reacted to this news.

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