Dow lost all of 2, decliners over advancers 2-1 & NAZ added 4. The MLP index was off fractionally to the 286s & the REIT index declined 1+ to the 351s. Junk bond funds hardly budged & Treasures remained weak. Oil tumbled to the 49s (more below) & gold crawled higher, up 3 to 1276.
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif?0.9200603842870144)
Tax cuts & deregulation can help the US economy grow faster than the recent pace of about 2%, even with unemployment at a the lowest level since 2001, National Economic Council Director Gary Cohn said. “We’ve had a couple good quarters of GDP, but we’re still not on a sustainable level of growth that we should be and want to be,” Cohn said. “We believe we can have 3-plus percent growth with taxes and the regulation reform that we’re after now.” Payrolls declined 33K in Sep in the aftermath of Hurricanes Harvey & Irma. But other parts of the report still pointed to a strong job market. Wages increased 2.9% from a year ago, unemployment reached a 16-year low of 4.2% & the labor-participation rate edged up. Economists cautioned against reading too much into the report because of the impact from the storms. Cohn said the administration is “very excited about the numbers” & views them as further evidence that Pres Trump's economic policies have created gains for workers. But there’s more potential to be tapped, he added. “We believe there are more workers willing to come into the workforce,” Cohn said. “We believe that the tax cut is essential to continue the economic growth that we’ve started.”
Cohn Cites Untapped U.S. Growth Potential to Sell Trump Tax Plan
The states that have the most to lose from a key provision in the Rep tax plan are joining forces to make their case. Congressional leadership met at least 2 dozen Rep lawmakers from NY, NJ & California to discuss the possible elimination of the state & local tax deduction, also known as SALT, as part of the final tax reform bill. The meeting was called after members from these states started voicing their concerns to senior lawmakers about the impact the eradication of the loophole could have on their districts, Rep. Peter King (R-N.Y.) said. “We had a meeting with Reps. Scalise (R-La.), Kevin McCarthy (R-Calif.) and Kevin Brady (R-Texas) and made some pretty forceful arguments. They are certainly open to compromise. The question is how far the compromise goes,” King said. King argued the negative impact the loopholes elimination could have on his district, NY's 2nd Congressional District, & how there needs to be a compromise if Reps want to pass comprehensive tax reform. “To have a chance of passing, it has to be negotiated and it has to be negotiated on good terms. That’s not a threat, it’s a reality. My district won’t survive if this goes away," King said. He added that if they excluded SALT from the tax code it could be political sabotage for the Rep Party. “This is the equivalent of going into some of the most red states and talking about gun control,” King added. King indicated that he's willing to compromise on keeping the elimination of SALT in the final tax blueprint, but only if it’s eradicated for those in the upper income bracket. “I suggested that if it is going to be in there at all it should only apply to those who make over $400,000. Because otherwise you are looking at a tax increase for everyone else and maybe at best they break even,” King said. A spokesman for Scalise called it “productive.” “It was a productive discussion, one of many important conversations the Whip office will hold with members as House Republicans work to pass pro-growth tax reform that creates jobs and benefits middle class families,” was added. NY, along with NJ & California, are considered high-tax states that give taxpayers a break with the deduction. About 1/3 of the value of the tax break, which in total is estimated to be $1.3T in savings, is used by filers in these states according to a study by the nonpartisan Center for a Responsible Federal Budget. While Republican lawmakers try to negotiate a deal on the deduction, White House officials have been indicating that Pres Trump is not willing to discuss an alternative to paying for his tax plan. “The president’s been clear about his position, and we’re moving forward with the framework that we’ve laid out,” White House press secretary Sarah Sanders said when asked whether the administration was open to making a deal on the tax break. At a press conference, Brady gave a slightly different perspective, acknowledging that leadership is willing to listen to those who represent the states who would be most impacted by the loss of the loophole. “At this point there’s been no change to the framework the way it was laid out, but we’re again listening very carefully to ideas and how we can make sure we can deliver tax relief to those families,” Brady said.
Gary Cohn said that while the Trump administration is open to negotiating the specific terms of tax reform, it won’t budge on 2 items: a middle-class tax cut & a corp tax cut. “The two areas where we are very committed and we really don’t want to negotiate, and we won’t negotiate, is a middle-income tax cut and a business tax rate that makes us competitive with the rest of the world,” Cohn said. “We’re negotiable how we’re going to get there.” While the tax writers have put forth a proposed 15 percentage point cut to the corp tax rate, one controversial item the administration has proposed in order to level the playing field for middle-income Americans is the elimination of state & location tax deductions. Eliminating the popular deductions could increase federal revenue by $1.3T over the next decade & about 24% of taxpayers nationwide would see an increase in taxes. Those increases would be outsized for residents in high-tax states such as NY & California, where resident taxpayers would pay more than 30% of the tax increase from trashing the deduction. Additionally, individuals with incomes in excess of $100K would have the largest tax increase in both $s & as a percentage of income, paying 90% of the increase associated with eliminating SALT.
Gary Cohn: Middle-income tax cuts are non-negotiable
Oil futures plunged over 2%, & were set to end Brent's longest multi-week rally in 16 months following profit taking & the return of oversupply concerns. Brent crude futures were down $1.26 at $55.74 a barrel, snapping a 5-week winning streak that was the longest in more than a year. West Texas Intermediate (WTI) crude was at $49.35, down $1.44 or 2.8% on the day. Russia clarified remarks made by Pres Putin about the oil market earlier this week, saying he did not propose extending a global oil output cut deal but said he recognized it was a possibility. The prospect of extended oil production cuts by OPEC & other producers led by Russia had supported prices in recent sessions. Saudi Arabia's energy minister said he was "flexible" about prolonging the production-curbing pact until the end of 2018. However, concerns linger about growing US crude exports, due to a hefty WTI discount to Brent prices, which makes US oil more competitive. A stronger $, which makes greenback-denominated more expensive for buyers in other currencies, also led to further losses in the oil market. The $ hit a 10-week high after data showing the largest gain in US wages since Dec 2016 bolstered bets on an interest rate hike by year-end. US gov data showed this week that crude exports had risen to a record of nearly 2M barrels per day as domestic production grows. The Baker Hughes' report on the US oil drilling rigs, an early indicator of future output, showed the rig count fall in for the 4th week out of the last 5. Investors were also watching Tropical Storm Nate as companies shut down some oil production in the Gulf of Mexico ahead of its expected arrival in the area as a hurricane on Sun.
Oil down 2%, set to end five-week rally as oversupply fears resurface
The jobs report is being assessed. The decline in jobs is related to the large increase in jobs for restaurant workers not being able to get to work. That's temporary. The talk by those guys in DC is encouraging. That means they're reading what has been proposed & beginning the bargaining process on a major piece of legislation. That's how legislation works. The Dow continues strong, essentially at record highs & up an amazing 4.4K since the election.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Tax cuts & deregulation can help the US economy grow faster than the recent pace of about 2%, even with unemployment at a the lowest level since 2001, National Economic Council Director Gary Cohn said. “We’ve had a couple good quarters of GDP, but we’re still not on a sustainable level of growth that we should be and want to be,” Cohn said. “We believe we can have 3-plus percent growth with taxes and the regulation reform that we’re after now.” Payrolls declined 33K in Sep in the aftermath of Hurricanes Harvey & Irma. But other parts of the report still pointed to a strong job market. Wages increased 2.9% from a year ago, unemployment reached a 16-year low of 4.2% & the labor-participation rate edged up. Economists cautioned against reading too much into the report because of the impact from the storms. Cohn said the administration is “very excited about the numbers” & views them as further evidence that Pres Trump's economic policies have created gains for workers. But there’s more potential to be tapped, he added. “We believe there are more workers willing to come into the workforce,” Cohn said. “We believe that the tax cut is essential to continue the economic growth that we’ve started.”
Cohn Cites Untapped U.S. Growth Potential to Sell Trump Tax Plan
The states that have the most to lose from a key provision in the Rep tax plan are joining forces to make their case. Congressional leadership met at least 2 dozen Rep lawmakers from NY, NJ & California to discuss the possible elimination of the state & local tax deduction, also known as SALT, as part of the final tax reform bill. The meeting was called after members from these states started voicing their concerns to senior lawmakers about the impact the eradication of the loophole could have on their districts, Rep. Peter King (R-N.Y.) said. “We had a meeting with Reps. Scalise (R-La.), Kevin McCarthy (R-Calif.) and Kevin Brady (R-Texas) and made some pretty forceful arguments. They are certainly open to compromise. The question is how far the compromise goes,” King said. King argued the negative impact the loopholes elimination could have on his district, NY's 2nd Congressional District, & how there needs to be a compromise if Reps want to pass comprehensive tax reform. “To have a chance of passing, it has to be negotiated and it has to be negotiated on good terms. That’s not a threat, it’s a reality. My district won’t survive if this goes away," King said. He added that if they excluded SALT from the tax code it could be political sabotage for the Rep Party. “This is the equivalent of going into some of the most red states and talking about gun control,” King added. King indicated that he's willing to compromise on keeping the elimination of SALT in the final tax blueprint, but only if it’s eradicated for those in the upper income bracket. “I suggested that if it is going to be in there at all it should only apply to those who make over $400,000. Because otherwise you are looking at a tax increase for everyone else and maybe at best they break even,” King said. A spokesman for Scalise called it “productive.” “It was a productive discussion, one of many important conversations the Whip office will hold with members as House Republicans work to pass pro-growth tax reform that creates jobs and benefits middle class families,” was added. NY, along with NJ & California, are considered high-tax states that give taxpayers a break with the deduction. About 1/3 of the value of the tax break, which in total is estimated to be $1.3T in savings, is used by filers in these states according to a study by the nonpartisan Center for a Responsible Federal Budget. While Republican lawmakers try to negotiate a deal on the deduction, White House officials have been indicating that Pres Trump is not willing to discuss an alternative to paying for his tax plan. “The president’s been clear about his position, and we’re moving forward with the framework that we’ve laid out,” White House press secretary Sarah Sanders said when asked whether the administration was open to making a deal on the tax break. At a press conference, Brady gave a slightly different perspective, acknowledging that leadership is willing to listen to those who represent the states who would be most impacted by the loss of the loophole. “At this point there’s been no change to the framework the way it was laid out, but we’re again listening very carefully to ideas and how we can make sure we can deliver tax relief to those families,” Brady said.
Lawmakers fight back against state and local deduction elimination
Gary Cohn said that while the Trump administration is open to negotiating the specific terms of tax reform, it won’t budge on 2 items: a middle-class tax cut & a corp tax cut. “The two areas where we are very committed and we really don’t want to negotiate, and we won’t negotiate, is a middle-income tax cut and a business tax rate that makes us competitive with the rest of the world,” Cohn said. “We’re negotiable how we’re going to get there.” While the tax writers have put forth a proposed 15 percentage point cut to the corp tax rate, one controversial item the administration has proposed in order to level the playing field for middle-income Americans is the elimination of state & location tax deductions. Eliminating the popular deductions could increase federal revenue by $1.3T over the next decade & about 24% of taxpayers nationwide would see an increase in taxes. Those increases would be outsized for residents in high-tax states such as NY & California, where resident taxpayers would pay more than 30% of the tax increase from trashing the deduction. Additionally, individuals with incomes in excess of $100K would have the largest tax increase in both $s & as a percentage of income, paying 90% of the increase associated with eliminating SALT.
Gary Cohn: Middle-income tax cuts are non-negotiable
Oil futures plunged over 2%, & were set to end Brent's longest multi-week rally in 16 months following profit taking & the return of oversupply concerns. Brent crude futures were down $1.26 at $55.74 a barrel, snapping a 5-week winning streak that was the longest in more than a year. West Texas Intermediate (WTI) crude was at $49.35, down $1.44 or 2.8% on the day. Russia clarified remarks made by Pres Putin about the oil market earlier this week, saying he did not propose extending a global oil output cut deal but said he recognized it was a possibility. The prospect of extended oil production cuts by OPEC & other producers led by Russia had supported prices in recent sessions. Saudi Arabia's energy minister said he was "flexible" about prolonging the production-curbing pact until the end of 2018. However, concerns linger about growing US crude exports, due to a hefty WTI discount to Brent prices, which makes US oil more competitive. A stronger $, which makes greenback-denominated more expensive for buyers in other currencies, also led to further losses in the oil market. The $ hit a 10-week high after data showing the largest gain in US wages since Dec 2016 bolstered bets on an interest rate hike by year-end. US gov data showed this week that crude exports had risen to a record of nearly 2M barrels per day as domestic production grows. The Baker Hughes' report on the US oil drilling rigs, an early indicator of future output, showed the rig count fall in for the 4th week out of the last 5. Investors were also watching Tropical Storm Nate as companies shut down some oil production in the Gulf of Mexico ahead of its expected arrival in the area as a hurricane on Sun.
Oil down 2%, set to end five-week rally as oversupply fears resurface
The jobs report is being assessed. The decline in jobs is related to the large increase in jobs for restaurant workers not being able to get to work. That's temporary. The talk by those guys in DC is encouraging. That means they're reading what has been proposed & beginning the bargaining process on a major piece of legislation. That's how legislation works. The Dow continues strong, essentially at record highs & up an amazing 4.4K since the election.
Dow Jones Industrials
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