In case you missed it, the House voted to pass the GOP tax bill yesterday, but the vote will need to be redone today due to a technicality. Without getting into detail about that technicality, it is clear that those opposing the bill are doing everything they can to block it, even though it is clear that it already has the votes to pass the house since, well, it already was voted to pass by the house before. Of course, there is the possibility that other tactics might be used to stall the vote. In fact, I would expect nothing less than that to occur. But in the end, this appears to be a done deal and we can expect the markets to respond somewhat positively to the news, but I’m not so sure that we will get a massive rally since it was already expected that the bill would pass as early as Friday.
In the meantime, the Senate voted the bill through during a late session, which again only leaves the House to redo the vote and pass the Bill. Once this is done, the President will sign the bill into law and the new tax law will go into effect at the beginning of 2018. We can expect larger public companies to use any tax savings they might realize in a combination of reinvestment, stock buybacks, and acquisitions. Most likely average wages will not increase at larger companies, and probably not for smaller companies either, but we can expect more hiring for smaller companies due to more cash being available as well as the fact that consumer spending should increase. We can also expect consumers to pay down debts, which should cut somewhat into the bottom lines for lenders down the road, but I would expect people to take out larger mortgages with more money in their pockets. Either way, the markets will be strongly affected by this bill over time. We’ll keep an eye on things as they develop.