Displaying items by tag: biden
President Biden’s 2023 federal budget levy’s a new ultra-wealthy tax that would apply 20% total income tax on those with a net worth of more than $100 million. Notably in the deal, it opens the window to tax unrealized capital gains or any asset growth. The bill is expected to meet a brick wall in congress however as even moderate Dems will have a difficult time supporting it. Biden’s selling point is the expected $360 billion in payments toward the deficit in the next decade. However, the senate proposed a very similar bill last year that was shut down by congress.
Finsum: Taxing unrealized gains is a slippery slope, and hopefully would never trickle down to different wealth classes.
Biden has hit a brick wall with his climate legislation, and now is going out of his way pleading that oil companies double down on drilling efforts to curb gas prices in response to Russia-Ukraine invasion. However, the SEC is expected to propose new regulation that will force companies to disclose data around their climate risks. This legislation will only come into effect as early as 2023, but it will put a major spotlight on the biggest polluters and carbon contributors. Many believe these changes will force companies to pay higher costs for their carbon use and maybe make it harder for companies to invest in green bonds and funds around these companies.
Finsum: This isn’t enough to end greenwashing; foriegn governments are well ahead of the US in terms of ESG regulation.
Biden’s administration has been an outspoken critic of crypto currency and these words now have actions behind them. Biden has signed an executive order to have various government agencies put forth a plan to regulate crypto. The admin is most concerned about consumer protection, national security, and illicit finance. Additionally the explosion in popularity in the industry and the wide array of digital assets is cause for concern because the admin is worried it might be getting out of hand. However, Biden makes it clear they want to maintain an American leadership position when it comes to the growing area of fintech. The director of the National Economic Council and the security advisor see this as a pathway forward to maintaining a leading role in digital assets and the fintech ecosystem.
Finsum: Crypto needs stable regulation; weekly threats coming from global leaders are bad. If this is on that path it's probably a good thing for crypto.
Private equity set many records for itself in 2021 with gigantic inflows and huge market outperformance, but could that all be slowed in 2022 by an escalating Russia-Ukraine conflict and inflation? Bain & Co said that steeper capital costs driven from these two scenarios will undercut PE as an asset class in 2022. Inflation will hurt growing PE investments and the cheap flow of capital is being reduced by the conflict. There are huge risks that valuations will be much flatter from this point out. This means that the huge inflows and record-setting outperformance might not hold up in 2022.
Finsum: 2021 inflows were already higher than market expectations a natural correction could have been in place, but this could be more severe than just a standard correction.
Investors, advisors included, seem to be wondering why the stock market has done quite well since Thursday morning when Russia invaded Ukraine. Many expected stocks to tumble—and they initially did—but the opposite has happened, with the S&P 500 up around 5% since the close of business on the 23rd. The reason why has everything to do with the Fed and interest rates. The market now thinks the Fed is in a bind and won’t be able to hike rates as fast as they would have been able to before the conflict. This would mean a slower stop of the easy money surge that has gone on for years. Markets are now only forecasting a 12.5% chance of a 50 bp hike in March.
FINSUM: Stocks have jumped as a simple reaction to the fact that the path of rate hikes looks less steep right now than it did a week ago, which is also why the tech-heavy Nasdaq has jumped the most.