US: Focus still on tax reform - BBH
In view of analysts at BBH, while the US sees the October trade balance (likely wider deficit despite the amazing energy story) and service PMI and ISM, the real focus is elsewhere for investors.
“The tax reform that the Senate passed early this past Saturday retained the Alternative Minimum Tax for corporations (and some individuals). This came as a surprise to many as earlier drafts had not included it. If kept in the final version, it would offset other tax cuts. It is seen hurting technology companies and insurers the most, according to some reports. There has been some suggestion that its inclusion may have been an oversight as the bill was rushed.”
“The poor showing of the US tech sector weighed on Asian equities today. The net loss of the MSCI Asia Pacific index was negligible, but it was the seventh consecutive loss. For the record, it is up about 25.7% year-to-date. European bourses are lower as well. The Dow Jones Stoxx 600 is off nearly 0.5%, led by health care and information technology. It is giving back around half of yesterday's gains. It is up about 6.7% year-to-date. The MSCI Emerging Markets Index is off 0.4% today. Yesterday's 0.55% gains broke a three-day slide. It is up 29.6% year-to-date.”
“The S&P 500 gapped higher, rallied a bit more to new record highs and the proceeded to retreat all session to close on its lows. It is largely flat now. It closed near 2639. A break of 2628 warns of the risk of a retest on 2600 is a retracement objective and where the 20-day moving average is found. Since late August, the S&P 500 has closed only once (November 15) below this average.”