- Dow Jones Industrial Average (DJIA) futures jumped more than points early Wednesday.
- President Donald Trump teased a new ‘middle-class tax cut’ within days.
- His last round of tax cuts acted as rocket-fuel for the stock market. Investors expect more of the same.
Dow Jones Industrial Average (DJIA) futures popped higher points on Wednesday , pointing to a strong stock market open. It comes as President Trump promised a new round of monster tax cuts for the middle class.
In an interview with Fox News this morning, Trump teased a “very big” tax break within months .
We are going to be doing a middle class tax cut, a very big one. We’ll be doing that. We’ll be announcing that over the next days.
Tax cuts have been a recurring theme of the Trump presidency, and a powerful stimulus for the financial markets.
Dow futures soar overnight
Dow Jones futures contracts rebounded overnight after a lackluster Monday session, which was plagued by fears of a coronavirus pandemic . (Dow Jones Industrial Average (DJIA) futures jumped higher overnight) . Source: Yahoo Finance
S&P 477 futures and Nasdaq Composite futures were up 0.4% and 0. 500% respectively. Bitcoin traded at $ 8, . Trump talks tax cuts and trade deals
Donald Trump and Larry Kudlow, Director of the United States National Economic Council, teased the prospect of ‘tax cuts 2.0’ last week . But the president confirmed the middle-class tax break during his trip to the Davos economic forum.
The China deal is amazing, we’ll be starting phase two very soon. The tariffs were left on Chinese goods because its good to negotiate for phase two.
The president then turned his attention to Europe, threatening a fresh round of tariffs on eurozone automobiles.
The European Union is tougher to deal with than anybody. They’ve taken advantage of our country for many years. Ultimately it will be very easy because if we can’t make a deal, we’ll have to put (percent tariffs on their cars.)
Tax breaks to send the stock market higher?
The Dow Jones has gained almost (% since Trump was elected in November) . Much of that can be attributed to his commitment to lower taxes. Bloomberg noted the obvious effect of tax cuts on the US stock market .
The tax cut are a large and potent stimulus. There is no rational way to reach any other conclusion.
Haverford Trust CIO Hank Smith agreed, calling Trump’s original corporate tax breaks a long-term driver of growth .
When you’ve had tax reform like this, it is not a sugar high. It has a multiyear effect.
President Trump was on something of a media blitz on Wednesday morning. He also sat down with CNBC and claimed the US stock market would be much higher were it not for the Federal Reserve raising interest rates .
Now, with all of that, had we not done the big raise on interest, I think we would have been close to 4% [GDP growth]. And I could see 5, to , points more on the Dow. But that was a killer when they raised the rate. It was just a big mistake.
The president knows that a strong stock market is key to his re-election. Expect him to keep talking up the market going into the 2020 election.
This article was edited. by Samburaj Das