All Tax Cuts Are Temporary – Ep. 260

Summary: Every tax cut is temporary. Ryan's premise that we can't get the stimulus we need without a permanent tax cut is complete nonsense. Congress has no idea what the budget's going to be next year, let alone 10 years from now. The only budget that really counts, and even then they can't get it that accurate, is the current year. When the government cuts taxes it doesn't come with a guarantee that the rates are never going to go up.

* We had a bit of a turnaround Tuesday today; all of the major U.S. stock market averages were higher in the morning and we closed broadly lower on the day
* In fact, the Dow Jones did make an all-time record high this morning before closing down about 60 points, although the decline in the NASDAQ was greater
* We had a .082% decline in the NASDAQ; the Dow was only down by about .03%
* S&P 500 though had a bigger decline, it was down about .07%
* So the broader averages took a bigger decline than the Dow
* I don't think the technical damage is extreme
* Yes, we made new highs and closed lower, but it really wasn't an outside day
* It didn't close below Monday's lows, which would have been an outside reversal
* But when markets are as extended as they are, they can top on just about anything
* I put up an interesting article on my Facebook page that tried to draw a comparison between Amazon and Whole Foods merger and the big high-profile AOL-Time/Warner in 2000
* You had a big, internet darling making a big brick and mortar purchase and that marked the peak of the internet bubble
* And the author was making the case that this is another major internet company buying a brick and mortar company, a lot of fanfare, a lot of hype and maybe this is also going to mark a major top
* It's an interesting analysis, because I think we're at about the 15-year anniversary of the purchase
* It is an interesting comparison, not a perfect analogy; some things are similar and some things are not
* I do believe that the U.S. stock market is substantially overvalued, in fact a bubble
* The only reason I believe that the air is not going to come out of the bubble is because the Fed is not going to let it
* I am pretty sure that any significant decline in the stock market is going to be met with an aggressive Fed rate cut, quantitative easing
* I don't believe the Yellen Fed to allow the market to implode the way it did in 2008
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