Tax Day Trend & Two Sectors

Adios tax day 2023! It was good to se you go. Congrats to all of my CPA readers who braved another season and survived. I feel like there was more work done this year than in the recent past with more preliminary 1099s than ever before. Twitter was abuzz about paying taxes. 10% of taxpayers pay 80% of taxes which makes sense in a progressive tax system. Liz Warren claimed that Americans are paying so much in taxes simply because of “corporate greed”. Grover Norquist doesn’t think taxes should ever go up. I think if we removed both fringes from the debate and discussion, we could compromise time and time again and make progress.

As many of you know, Ronald Reagan was my favorite modern President. His confidence, his eloquence and his sense of humor were legendary. Even his opponents liked him. And as much as his administration forged the path for the great economic boom of the 1980s it wasn’t without raising taxes. But he did so opportunistically, when the economy was booming and could withstand it. And he cut taxes when? As the economy weakened and needed some stimulus. Politicians don’t do that today.

Tax day and the day after tax day are seasonally strong days. This year that is April 18th and 19th. The theory goes that there is a surge in IRA money sent to banks, brokerages and mutual fund companies that has to get invested quickly.

As I wrote about the other day, there has been a lot of good news and the market is only marginally higher. It looks a bit tired with good news becoming a time to sell. Nothing big. Perhaps just a pause to refresh or mild pullback. I do not see any danger signs flashing, just a continuous stream of pundits who hate and disavow the rally. If and when they turn positive, I won’t be as excited about the intermediate-term.

I wonder, will banks ever rally again? Of course I am kidding, but I thought they would bounce more than they have. The smaller ones still look crummy.

And for the recession talk, the consumer and consumer discretionary stocks are resilient after a horrendous 2022. They should be much weaker if recession was imminent.

On Monday we bought $SPHB. We sold levered S&P 500. On Tuesday we sold FJUN.