“People are optimistic.You know, the economy looks like it’s hitting on all cylinders….
I think we’ve been in a secular bull market since March of ‘09.Secular bull markets tend to run 15 or 20 years, so I think you’ve got years left in this,” said Jeffrey Saut, founder of Saut Strategy.
On that same day, another investment adviser, Michael Arone of State Street Global Advisors, told CNBC, “One of the things that the pandemic has underscored more than anything else is that the stock market is a forward-looking mechanism.”
Factored into that optimism was the knowledge that viruses eventually produce herd immunity, that the development of vaccines was proceeding at an unprecedented pace, and that the digital age, the ability to stay connected from home, was a new tool to keep a service-based economy and revenues pouring in, despite occasional glitches.
There are storm clouds on the horizon.The markets dislike tax hikes.The Biden administration and its congressional allies are preparing the biggest in a generation, one that promises to hit major corporations with a 28% rate.
While Democrats promise no one making less than $400,000 a year will be hit, many small-business owners file their taxes as individuals.
Tom Schatz, president of Citizens Against Government Waste, said, “So, it means the difference if your taxes increased by 10% and you’re making 500,000, right? That’s, you know, 50 grand.So, that’s a person or two people that you won’t hire.So, it has a devastating impact on employment for small businesses, and it means that there will be less household income to buy the goods and services that the economy needs to make to keep things going.”
Just as the markets respond positively to tax cuts, free market economists believe they’ll react negatively to tax hikes that are likely to take effect late this year.
Economist Art Laffer said, “Sometimes, it takes quite a while for the market to respond, but I don’t think in this case it will take very long.I mean, when the third year of the Reagan tax cut finally took effect on Jan.
1, 1983, the market saw that was going to happen on August 1982, right? And you’ve got that stock market boom that was just incredible …and it will respond the same way here, but only in the opposite direction.”
The pandemic has also proven the strength of the digital economy and, with it, new digital cryptocurrencies.Bitcoin has skyrocketed this year, outperforming other investments.In a sign of its growing acceptance, the adventurous see profit in bitcoin.
Tesla’s Elon Musk recently swapped $1.5 billion for a bitcoin investment.
The growing confidence in cryptocurrencies is being made possible by another new technology, blockchain.It is the foundation upon which cryptocurrencies lie, using a network of self-checking computers to eliminate the need for a central authority.That makes it not only more resistant to hacking, but for investors, it eliminates many processing fees, ensuring its place among the bullish.
.