While we cannot accurately adjust for the impact of the tax change in year to year comparisons, it is clear that, so far, the tax cuts apparently are not acting as stimulus. Year to year revenue growth is running well below pre-tax cut levels. The growth rate is fluctuating between -4% and +2%, whereas prior to the tax cut the growth rate was +2% to +10%.


[While the drop in tax collections is also] economic stimulus and it means that the top line economic data numbers will continue to run hot... the drop in revenue also means that the deficit has increased. That translates to more government borrowing. More borrowing means more Treasury supply. That must come out of the accounts of dealers and investors. The Fed is no longer a buyer. It's pulling money out of the markets.


While the effects haven't been clear yet in terms of lower stock prices, the time is coming. This is no time to be chasing stocks.

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