President Donald Trump’s Tax Code Changes a Happy Day for Shareholders
$DIA, $SPY, $QQQ, $VXX
US President Donald Trump and Congressional Republicans have plans to change the tax code to give businesses greater incentive to invest in the US and to hire more Americans.
That could mean a “Happy” payday for shareholders of technology giant Apple Inc (NASDAQ:AAPL), which has $246-B parked overseas.
One proposal will allow companies to return profits from overseas operations to the US without facing double taxation, although many companies that repatriated cash during a Y 2004 tax holiday cut jobs and spending on research and development.
Investors are salivating over repatriation, which could boost the EPS of the S&P 500 stock index by at least 3%, according to estimates by Bank of America Merrill Lynch (NYSE:BAC).
“If repatriation is accompanied by an end to interest expense deductions, companies may choose to pay down debt over buybacks,” the head equity strategist at BofA, said in a 29 January report. “Companies may also return the cash to shareholders by issuing a one-time special dividend: income remains in demand, given that both interest rates and dividend payout ratios remain historically low.”
While higher dividends and stock buybacks are popular, 60% of fund managers surveyed by BofA would like US companies to make investments in plant and equipment rather than return cash to shareholders.
Friday, the US major stock market indexes finished at: DJIA +186.55 at 20071.46, NAS Comp +30.57 at 5666.76, S&P 500 +16.57 at 2297.42
Volume: Trade on the NYSE was heavy with 1.01-B/shares exchanged hands.
- NAS Comp +5.3% YTD
- S&P 500 +2.6% YTD
- DJIA +1.6% YTD
- Russell 2000 +1.5% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Neutral (0.14)||Neutral (-0.10)||Neutral (0.11)||Bullish (0.40)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Neutral (0.19)||Neutral (0.16)||Neutral (0.23)||Neutral (0.19)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Very Bullish (0.51)||Bullish (0.46)||Very Bullish (0.54)||Very Bullish (0.53)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Bearish (-0.45)||Bearish (-0.49)||Very Bearish (-0.74)||Neutral (-0.11)|
Have a terrific weekend.