Yep. Hi. Here we are again.
The Land Down Under (AKA Australia)
- The ASX200 index, which tracks the value of the largest 200 companies trading on the ASX was 0.12% higher last week
- The All Ordinaries index, which tracks the largest 500, was also up, finishing 0.20% higher
The Australian Stock market was quite conflicted last week. On the one hand, it got a massive boost from news the proposed tax cuts in the United States are becoming more likely to be passed into law (see below). On the other, the government announced a Royal Commission into the “alleged” misconduct by banks, insurance companies and superannuation funds. This news is huge. And only bad for banks. We’ll talk about it in detail later this week, but for now just know that it’s happening. Bank shares tanked on the announcement and rightfully so. Aside from any dumb or duplicitous behavior which no doubt will be uncovered through the investigation, this is going to be a massive distraction for senior management, making it hard for them to focus on more strategic elements of their business.
The banks have been in the press for all the wrong reasons over the last few years, so this commission should be welcomed by all of you. If you want an example of just one banks missteps over the past couple of years, read the section called “CBA – Want they meant” which I wrote in this article a few months back.
Trumpville (AKA the United States of America)
- The Dow Jones index which tracks the 30 largest companies in the US was up 2.86% for the week
- The S&P500 index which tracks the 500 largest was up 1.53%
- The NASDAQ which is an index pretty much dominated by technology stocks was down 0.60%
I said to you a few weeks ago one of the biggest things which will determine whether stock markets go up or down in the short term will be based on developments in the United States. Specifically regarding the passing of some pretty dramatic changes to their tax code. As a quick reminder, the corporate tax rate in the US is 35%. Donald wants to slash it to just 20%. Anyway, last week investors became more certain that this change will go through, after the bill which will put this change into law passed in the senate. I’ll write a full piece on this later this week, but for now just know that we’re not done yet. The bill has now passed in the both the house and the senate it’s true, but there’s still more work to be done. Believe it or not, the bill which the house passed is actually quite different to the one passed in the senate… In order for the bill to become law, the house and senate must first be in total agreement. Again, we’ll cover that later this week.
The point is, another big hurdle has been passed and investors cheered. And then this happened. And the market shat itself. Shares fell nearly 2% immediately following its release. We await further updates with eager anticipation.
Yet another all-time high (AKA Bitcoin)
11,820 USD at the time of writing. Another all-time high.
Here’s something which has flown under the radar. The IRS, which is the US version of the Australian Taxation Office, has won a ruling in federal court, ordering Coinbase to hand over details of 14,000 peoples bitcoin accounts (Coinbase is the largest Bitcoin exchange in the United States). Wanna know why? Cause the IRS noticed that on average only about 800 people include Bitcoin gains in the annual tax returns each year. Are people trying to avoid taxes? The IRS certainly seems to think so.
This is an important development in the world of Crypto-currencies as one of the more desirable traits of the Bitcoin is that it sits outside “the system”, out of the control of the government. This ruling proves that it isn’t.
Anyway, that’ s 5 minutes. Hope it helped.