US Stocks Open At Record Highs, CEOs Defend Border Adjustment Tax
February 21, 2017
CEOs write letter to defend proposed border-adjustment tax; Trump prepares executive orders on climate change; US Stocks Open at Record-Highs Tuesday Due to Rise in Oil Prices and Strong Retail Results; Momentum in U.S. manufacturing and service sectors slowed in February.
- CEOs write letter to defend proposed border-adjustment tax. The CEOs of 16 companies, including Boeing, General Electric, McIlhenny Company, Pfizer and S&P Global defended Trump’s proposed border-adjustment tax amidst doubts about the idea in the Senate. The 16 business leaders, who are all members of the American Made Coalition, signed the letter voicing their support. The letter also supported lower tax rates that would allow businesses to immediately write off costs of their capital investments and move the U.S. toward a “territorial” tax system that doesn’t tax U.S. companies’ foreign earnings. The border-adjustment tax would raise more than $1 trillion in revenue for the government and help pay the cost of lowering tax rates. However, the proposal is fiercely opposed by retailers, who say that the border tax would significantly increase the cost of consumer goods. Meanwhile, in the Senate, the tax proposal has not received a good reception. Sen. Lindsey Graham (R-S.C.) predicted that the House GOP tax plan “won’t get 10 votes in the Senate” as drafted. Speaker Paul Ryan (R-Wis.) met with Senate Republicans last week to sell the plan, saying the border tax will help put American manufacturers on equal footing with foreign-based companies. Ryan’s office touted the letter from the American Made Coalition Tuesday. [The Hill]
- Trump prepares executive orders on climate change. The White House reported on Tuesday that it is preparing executive orders targeting climate and water rules. Through executive orders, President Trump will reportedly tell the Environmental Protection Agency (EPA) to rewrite a 2015 rule that cracks down on greenhouse gas emissions from existing power plants. He also plans to tell the EPA and the Army Corps of Engineers to rewrite another 2015 rule that gives the federal government more regulatory power around the country. He also plans to lift the Interior Department moratorium on federal land coal leasing. The power plant rule – called the Clean Power Plan – and the water rule were two of the most expansive and controversial environmental rules that were issue by the Obama administration. The Clean Power Plan envisioned a 32 percent reduction in electricity sector carbon emissions by 2030. The water rule – known as the Clean Water Rule – gives federal government regulatory jurisdiction over small waterways around the country. [The Hill]
Economic Indicators & News
- US Stocks Open at Record-Highs Tuesday Due to Rise in Oil Prices and Strong Retail Results. US stocks opened at record-high levels on Tuesday due to the rise in oil prices and strong results of top U.S. retailers. Investor sentiment was boosted by more than 1.5 percent due to the rise in oil prices, after OPEC reported that the group was hopeful of higher compliance with its deal to cut production. Stores like Wal-Mart, Macy’s and Home Depot beet sales and profits estimates and contributed to the boost in stocks. Strong earnings, robust economic data and the possibility of a fiscal stimulus have lifted the main indexes to record highs in the past few months. Nine of the 11 major S&P 500 sectors were higher. [Reuters]
- Momentum in U.S. manufacturing and service sectors slowed in February. The Markit flash U.S. manufacturing purchasing managers index fell to a seasonally adjusted reading of 54.3 in February from 55 in January. Meanwhile, a similar gauge for services slipped to 53.9 from a 14-month high of 55.6 in the prior month. Both indices slipped to two-month lows. Readings below 50 indicate that more respondents said conditions are getting worse than getting better. Still, the readings are broadly in level with the 2.5% annualized growth rate in the economy in the first quarter. [MarketWatch]