WASHINGTON, April 26, 2017 – Fairly short report today as stock market averages essentially flatlined on Thursday, perhaps still digesting President Trump’s tax outline presentation from Wednesday; the possibility of another stab a Obamacare repeal, replace, or something else; and the big earnings and sales increases for the ever-more monster-sized Amazon (symbol: AMZN) and that other tech behemoth, Alphabet, aka Google-all-divisions (GOOGL).
No surprise on Amazon. For better or ill, Bezos & Co. have been systematically destroying storefront retail as we know it, administering a near-fatal dose of competition for a few retailers this past Christmas. Oddly, Amazon’s shares have soared so high of late, that the stock is getting some sell recommendations by analyst who think the trade in Amazon is getting out of hand.
Alphabet-Google’s competition destruction derby operates another way entirely, by promoting or demoting articles or sites based on what seem to be constantly moving algorithms that assess new stuff faster than any less-than-huge website can adjust for.
Google’s latest algorithmic tweak is focused on:
- Screening out “fake news.” (Which, alas, probably means things like this column, which, given its greedy, capitalist, libertarian tilt, risks being categorized as “fake news” on America’s left coast, even though we write about investing for the masses, not the elites.)
- Screening out sites that push malware onto the unwary. (Double-plus good for this one if they can do it.)
- Demoting sites that take too long to load on mobile devices. (Another relatively good thing, given that such sites gobble often expensive data time, which, for one subset of customers, can greatly increase their monthly bill.)
As for the market in general, the one-two punch from this pair of tech giants may very well goose tech stocks, which have been pretty robust even during the furtive correction of the big Trump Rally that’s been going on in recent weeks.
On the other hand, Cliffs Industries (CLF), a stock we usually discuss in our companion column, reported a big increase in sales for the current quarter, but a big miss on profit figures, causing the stock to take a metaphorical header off the high board. CLF shares, and our large-ish position in them, tanked right along with this selling panic, which occurred on huge volume.
Flip side: Cliffs apparently chose to eat some nagging costs in the past quarter and dramatically reduced its nerve-inducing high debt load. Looking ahead, the company is moving into iron ore contracts put in place with higher prices, so perhaps, we hope, this was the worst of it.
Plus, the company seems destined to return to a good measure of profitability in the near future if higher iron ore prices continue to hold. Fingers crossed. We’re holding, after taking a swig of Maalox this morning.
Re: That Trump Tax Reform outline, which is what the Administration presented, rather than a point-by-point plan. President The Donald is a quick learner and now understands, alas, that passing the good stuff you promised your voters has to run a nasty gauntlet of preening politicians before it can happen. Hence the outline, lacking specifics, which will likely show up later. Or as many of them will show up as the President can push through.
Here’s a great bullet-point summary ZeroHedge ran Wednesday, hitting the high points of the Trump tax proposal:
2017 Tax Reform for Economic Growth and American Jobs
“The Biggest Individual And Business Tax Cut in American History”
Goals For Tax Reform
- Grow the economy and create millions of jobs
- Simplify our burdensome tax code
- Provide tax relief to American families—especially middle-income families
- Lower the business tax rate from one of the highest in the world to one of the lowest
Tax relief for American families, especially middle-income families:
- Reducing the 7 tax brackets to 3 tax brackets of to 10%, 25% and 35%
- Doubling the standard deduction
- Providing tax relief for families with child and dependent care expenses
- Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers
- Protect the home ownership and charitable gift tax deductions
- Repeal the Alternative Minimum Tax
- Repeal the death tax
- Repeal the 3.8% Obamacare tax that hits small businesses and investment income
- 15% business tax rate
- Territorial tax system to level the playing field for American companies
- One-time tax on trillions of dollars held overseas
- Eliminate tax breaks for special interests
Looks pretty good to us. So far. We’ll halt today’s column here, since we’re told fans of Internet journalism don’t like the stuff they read to run too long.
More tomorrow unless we find ourselves on the road. Beware: Despite today’s one-two Amazon-Alphabet tech win, that always-looming “government shutdown” could steal the headlines tomorrow and stampede the market’s Nervous Nellie traders to bail.