It’s 8:30 so we know it’s hammer time, but the tax cuts are bogged down with two major uncertainties. Here’s an update…
Here we go again:
Silver is easy to move right now because of the overall light volume leading up to the steady price attacks:
Again gold is holding up somewhat better, but still it is being hit in the pre-market:
That is one ugly gold chart, but it’s easy to see the overall trend since 4:20 a.m. EST and especially since 8:30.
Then there’s Fed Heads Bullard and Kaplan speaking today, at 9:05 and 9:30 respectively, and Fed Head Harker speaks at 10:15 so look for continued pressure.
But the Fed speeches will take a background to the big issue of the day: Tax cuts.
It’s turning into a tax cut dog-and-pony show in the Senate.
The Senate was supposed to vote on the tax cuts yesterday, but the vote has been delayed until today at 11:00 a.m. Supposedly.
There are at least two problems right now with the tax cut proposal.
First, it appears there will be some tax increases (to the tune of $350,000,000,000) as “fiscal conservatives” are concerned about the impact on the federal deficit.
Here’s more from Reuters:
WASHINGTON (Reuters) – U.S. Senate Republicans will grapple on Friday with the possibility of adding a tax increase to sweeping legislation meant to cut taxes on businesses and individuals, aiming to win support from fiscal conservatives worried about the bill’s impact on the federal deficit.
Republicans were still wrangling behind the scenes over how to raise $350 billion or more in taxes over 10 years to prevent their legislation from ballooning the federal deficit if the proposed cuts fail to generate the expected economic growth.
Senate Republican leader Mitch McConnell and others were also working on deals to win support from party members who want better tax breaks for non-corporate pass-through businesses, a bigger child tax credit for families, and a $10,000 deduction for state and local property taxes.
Despite the hurdles, rank-and-file Republicans were still optimistic that they could approve the bill this week and agree this month to final legislation with the House of Representatives, which their party also controls.
There are also problems with the Treasury Department as Mnuchin has failed to make an analysis of the proposed fiscal impact as promised.
Here’s more on Mnuchin’s from Bloomberg:
The Treasury Department’s inspector general is examining whether political considerations interfered with Secretary Steven Mnuchin’s promised analysis of the Republican tax proposal.
“It’s a top priority,” Rich Delmar, counsel to inspector general Eric Thorson, said Thursday in an email. Delmar said he could not provide a timeframe for when the inquiry would be complete because it would depend on how quickly the department’s official watchdog receives the information and “how complex issues are.”
In a letter early Thursday, Senator Elizabeth Warren asked Thorson’s office to review whether Treasury resources were used to research the tax plan, and why no analysis has been released to the public or Congress. Mnuchin has repeatedly pledged that the Republican proposal would pay for itself through economic growth, and that his department would provide detailed analysis to support those statements.
But, with the Senate preparing to vote on the tax overhaul this week, Mnuchin has yet to deliver the analysis.
“Either the Treasury Department has used extensive taxpayer funds to conduct economic analyses that it refuses to release because those analyses would contradict the Treasury Secretary’s claims, or Secretary Mnuchin has grossly misled the public about the extent of the Treasury Department’s analysis,” Warren, a Democratic Senator from Massachusetts, wrote in the letter.
Here’s CNN’s brief report on the delay posted just this morning:
Republicans Senators are working hard to pass the biggest Tax Cuts in the history of our Country. The Bill is getting better and better. This is a once in a generation chance. Obstructionist Dems trying to block because they think it is too good and will not be given the credit!
— Donald J. Trump (@realDonaldTrump) December 1, 2017
Finally, VIX has been creeping up all week.
After Friday’s “flash crash” in the VIX to the lowest print ever, “fear” in the market is on the rise:
Which is just one sign that the tax cuts are not the given everybody thinks they are.
If there is a vote today and it passes in the Senate, look for the “news” to provide cover for yet another attack.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.