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Republican Tax Bill Passes House; Senate Vote Pending

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The Republican-controlled House of Representatives passed a historic tax bill Tuesday afternoon that will reduce corporate taxation and simplify the individual tax code.

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Tax Reform Achieved

The bill, which amounts to $1.5 trillion in savings, was approved on a vote of 227-203. Twelve Republicans and all 191 Democrats voted against it.

Tax reform was one of President Trump’s main priorities on the campaign trail, and was one of the first items the administration put through legislation. After a lengthy debate, including dissent from within the GOP party, Republicans managed to set aside their differences in time to implement the new legislation on Jan. 1, 2018. Tax reform also gives the Trump administration the momentum it needs to push the rest of its agenda next year.

A final Senate vote is expected Tuesday night, which would grant President Trump the ability to sign the package imminently. The new legislation has been dubbed the Tax Cuts And Jobs Act.

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Both houses of Congress tweaked respective versions of the tax bill to reach a conclusion on Tuesday. Under the new bill, the corporate tax rate will be reduced to 21% from 35%. A 20% deduction will also be given to many pass-through businesses.

House Speaker Paul Ryan said the new bill will “help hard-working Americans who have been left behind for too long,” adding that the average family would receive $2,059 in tax cuts next year.

President Trump took to Twitter Tuesday afternoon to congratulate Paul Ryan, Kevin McCarthy, Kevin Brady, Steve Scalise and Cathy McMorris Rodgers for getting the deal done.

Stocks Fail to Rally

The initial reading of the Tax Cuts And Jobs Act failed to lift U.S. stocks on Tuesday, as investors pared back their exuberance. Expectations of imminent tax reform lifted Wall Street to record highs at the start of the week.

The large-cap S&P 500 Index fell 0.3% to close at 2,681.47. Seven of 11 S&P 500 sectors finished in negative territory, with utilities and real estate posting the heaviest losses.

Meanwhile, the Dow Jones Industrial Average closed down 37.45 points, or 0.2%, to 24,754.75. The technology-driven Nasdaq Composite Index settled down 0.4% at 6,963.85.

All three indexes settled in record territory Monday.

A measure of implied volatility known as the CBOE VIX rose for a second consecutive session and closed in double-digits for the first time in five days. The so-called “fear index” climbed 5.3% to finish at 10.03.

In currencies, the U.S. dollar declined against a basket of world peers as the post-FOMC rally continued to fade. The U.S. dollar index (DXY) was last down 0.3% at 93.45.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 452 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market Overview

Market Update: Stocks Slide as U.S.-China Trade War Risks Reemerge

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U.S. stocks declined Friday, with the Dow briefly falling more than 200 points after the Trump administration moved ahead with planned duties on Chinese goods, reigniting fears of a global trade war.

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Stock-Rally Falters

Risks of an all-out trade war dragged equity prices lower, with all of Wall Street’s major indexes posting declines. The Dow Jones Industrial Average fell 84.83 points, or 0.3%, to 25,090.48 with the likes of Caterpillar Inc. (CAT), and Chevron Corp (CVX) leading the declines.

The broader S&P 500 Index fell 0.1% to 2,779.42, with the majority of its primary sectors booking losses. Industries tied to primary goods were among the biggest decliners.

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The Nasdaq Composite Index fell from record levels, declining 0.2% to 7,746.38.

Implied volatility, as measured by the CBOE VIX, rose briefly on Friday before reversing gaind later in the session. The VIX fear index settled below 12 on a scale of 1-100 where 20 represents the historic average.

Trump Announces Tariffs

The Trump administration is moving forward with a plan to tax up to $50 billion in Chinese goods, sending a strong signal to Beijing that it will no longer tolerate theft of intellectual property.

A charge of 25% will be applied to Chinese goods that “contain industrially significant technologies,” President Trump announced Friday. The measures come “in light of China’s theft of intellectual property and its other unfair trade practices.”

Beijing responded swiftly by announcing it will implement import duties on the same scale as Washington. Neither country commented on the products that will be impacted.

China’s response was expected by President Trump, who said he would impose more tariffs if Beijing retaliates. Currently, the U.S. purchases far more from China than the other way around, which gives Washington some leeway in its tariff policy.

Investors are generally averse to any sign of protectionism in global markets, but this hasn’t stopped the Trump administration from recalling several of its current trade regimes in an effort to trim Washington’s deficit. Last  month, President Trump confirmed that Canada, Mexico and the European Union would be subject to import duties on steel and aluminum products.

Cryptocurrencies Stabilize After Tumultuous Week

The global cryptocurrency market stabilized Friday, as bitcoin rebounded from oversold levels and altcoins led by EOS reported gains.

All cryptocurrencies in circulation are collectively valued at $282.5 billion, according to CoinMarketCap. The market bottomed near $264 billion on Wednesday.

A top U.S. regulator delivered good news for cryptocurrency traders when he declared Ethereum not to be a security. Speaking at the Yahoo All Markets Summit event in San Francisco Thursday, SEC director William Hinman said Ethereum is too decentralized to be a security, which means it is in the same category as bitcoin.

The SEC has yet to issue a formal decree on Ethereum and it is not entirely clear whether a federal judge will agree with Hinman’s assertion. Advocates for Ethereum have rejoiced nevertheless given the ongoing debate over ether’s possible security status.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 452 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Stocks Pull Back as Euro Rebounds after Carnage

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Stocks are broadly lower today after yesterday’s mixed session, as European equities, which performed much better following the ECB’s meeting, also turned lower, following the major US indices. The losses are limited, as volatility remained relatively low, despite the week’s central bank bonanza that caused turmoil across asset classes.

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NASDAQ, 4-Hour Chart Analysis

The NASDAQ is still the strongest among the main benchmarks, while the Dow is the weakest, dragged lower by the weakness in financials and the energy segment. Small caps are still outperforming the broader indices together with tech stocks, and Trump’s new tariffs targeted at China boosted the segment yet again today.

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EUR/USD, 4-Hour Chart Analysis

The EUR/USD forex pair has been in the center of attention in the last couple of days as expected, while currencies turned volatile across the board in the aftermath of the Fed’s and the ECB’s monetary meetings. The Dollar index surged higher, boosted by the weakness of the common currency and after a brief positive period that weighed somewhat on stocks and other risk assets.

Economic releases were mixed today after a strong weak, at least in the US, as the Empire State Index and the UOM Consumer Sentiment Index were better than expected while Industrial Production slightly missed the consensus estimate. The Eurozone CPI was in line with expectations, while Canadian Manufacturing Production missed by a mile, putting further pressure on the already weak Canadian Dollar.

Commodities Smacked Lower amid Risk-Off Shift

Currencies were by far the most active assets, as we expected after the dovish surprise by the ECB yesterday, with the Dollar’s strength affecting the majors and the recently weak emerging market currencies as well.

USD/TRY, 4-Hour Chart Analysis

The initial bullish reaction in commodities and emerging currencies quickly faded, as the fragility of the most vulnerable countries continues to pose contagion risk, and although the Brazilian Real and the Turkish Lira are both above their recent lows, the charts still look dangerous.

WTI Crude Oil, 4-Hour Chart Analysis

The Dollar’s strength put an end to oil’s bounce, as the WTI contract fell back below the $65 per barrel level, while gold is also testing its lows from May. Oil looks bearish before next week’s OPEC meeting, but the outcome of the event is as hard to predict as ever, especially given the recent volatility in the price of the Black Gold.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 275 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Draghi Scores & Cryptos Celebrate

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Hi Everyone,

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Finally some much-needed clarity!

Just when some feared all was lost and crypto prices were showing signs of a potential plunge, some exciting news was delivered from the SEC in the United States, bringing with it the kind of optimism that we haven’t seen in months.

The crypto markets are now celebrating and have given a strong push off the lows.

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It seems the title of yesterday’s daily market update “A Crypto U-turn” was more appropriate than originally intended.

Let’s examine the impact of the SEC’s decision below.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Draghi Scores a Goal
  • Tiki-taka Stocks
  • Ethereum Uncertainty Removed

Please note: All data, figures & graphs are valid as of June 15th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

It was a perfect play by the European Central Bank. They’ve been worrying for months about the strength of the Euro and finally, at the 90th minute, they managed to pull off a power play that brought the ball all the way to the goal line.

The timing was impeccable. On Wednesday, the ECB’s counterpart in the United States announced a more aggressive monetary policy and plans to raise their interest rates more rapidly than expected.

At the same time, a decision was expected from the ECB to end their “money printing” stimulus package very soon.

During the press conference yesterday, the ECB not only confirmed the market’s expectations by announcing an end to the stimulus as of September but they also surprised everyone by indicating that they will not be raising their interest rates until the summer of 2019.

See, while everyone was concentrating on the striker (stimulus) and expecting him to kick the ball into the goalkeeper’s hands, he actually kicked it to his teammate (interest rates) who nobody was watching.

They haven’t quite won the match just yet though. Looking at the chart of the EURUSD, we can see that they failed to carry the Euro below the critical level of $1.15 and therefore any further downward pressure will be difficult to maintain.

Tiki-taka Stocks

The new policy divergence doesn’t seem to be affecting the stocks too much and with the US trade war expected to be notched up today, it seems they have other things on their mind.

Here’s a graph of the Dow Jones, which has been moving back and forth for most of this year without any real progress. Notice how it’s just taken a turn downward, towards the 50-day moving average (blue line).

Crypto Celebration!!!

The reaction from the crypto market yesterday was one of delayed gratification. In the United States, the authorities have been particularly ambiguous about the legal status of cryptocurrencies over the last few years.

While it was rather clear that Bitcoin itself should not be classified as a “security” the status of coins like Ether and Ripple’s XRP has remained a question. If a token is considered a security, it has some rather extreme implications for any person or business who traded it, including sizable fines and even the possibility of jail time for hodlers.

So, yesterday’s headline was certainly a cause for celebration.

The reaction was quick and clear across the entire crypto industry. Here we can see all of the cryptocurrencies traded on the eToro platform

Even though gravity does seem to be getting the better of the cryptos this morning, the announcement couldn’t have come at a better time. Here we can see the long-term chart of Ethereum and the beautiful bounce off the long-term trend line that the news has caused.

Now that Amecia seemingly has the freedom and security to trade Ether, this paves the way for big institutions like the CBOE and others to add Ethereum futures to their crypto offerings.

Let’s have a fantastic weekend!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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