Stocks Sank As Biden Plan To Tax The Rich

STATE OF THE MARKETS

Stocks sank as Biden plan to tax the rich. US stocks sank across the board and erased earlier gains as news hit the wires that President Biden proposed a capital gain tax of 43.4% on those making more than $1 million. Dow (-0.94%), Nasdaq (-0.94%) and S&P (-0.92%) including Russel (-0.31%) all fell on profit taking as investors rush to exit before the new tax come to law. Demand for bonds picked up and the 10Y yields edged lower to 1.54% from 1.56% on Wednesday.

Crude edged higher as news broke that Libya production has fell to about 1 million barrel per day on budgetary issue, which could offset the demand concerns on rising global covid cases. The black gold settled around $61.40/bl as New York closed. Demand for Dollar pressed gold lower, below $1,783.95/oz, as investors cashed out of equities at least for the short term.

Declined optimism sent the safe haven Yen to the reign of demand in the short and medium term, while short term accounts saw a full swing to Yen, Dollar and Swiss. High beta Kiwi and Aussie suffered a major setback in the short and medium term. Demand for Loonie and Sterling was mixed after BoC signaled it’s rate guidance, while Euro seemed to picked up in demand for the short and medium term. Long term risk sentiments look mixed.

G8 CURRENCIES SENTIMENTS

** ST refers to Short-Term daily turnover, MT is Medium Term weekly and LT refers to Long-Term monthly turnover.

WALL ST MOST ACTIVE

** % Change here refer to price

WALL ST TOP FLOWS

** % change here refers to volume

TOP 5 BLOCK ORDERS

OUR PICK – No new pick.

No new pick going into weekend. The proposed capital gains tax of 43.4% from the Biden Administration on those making more than $1 million may encourage investors to cash out of the equities markets before it come into law. Some may take a wait and see attitude, while those who exit will drive the demand for other asset classes especially currencies. Dollar might be the primary beneficiaries, but flight to Loonie could also be on the horizon as the yields are more attractive than Dollar for as long as 5Y. It would be interesting to see if Dollar Index would hold its 91 mark moving forward.

Trades updates: MRO remains active and stop updated to $11.50, SIRI remains active, our re-entry on USD/CHF around 0.92 with new stop at 0.9170 was stopped-out, APA was stopped-out but we remain bullish, we remain bearish NZD/USD and stop updated to 0.7240, we remain bullish CRON and NIO. Have a great weekend!

Disclaimer:

This article is for general information purpose only. It is not an investment advice or a solicitation to buy or sell any securities. Opinions expressed are of the authors and not necessarily of MFM Securities Limited or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.