Stock futures rose the evening of Sunday, Oct. 8, as the Senate takes a week off from its tax reform plans, which Goldman Sachs predicts could cut taxes by $1 trillion over the next decade.
The Nasdaq led the major indices Sunday evening, up 0.08%, followed by the Dow Jones Industrial Average at 0.06% and the S&P 500 at 0.05%. The dollar was down against most currencies, however, falling 0.27% against the Japanese yen. The euro rose 0.08% relative to the dollar, while the pound rose 0.11%.
The Senate is not in session this week, but Republicans’ tax reform bill is set to take the floor over the next few weeks after a budget resolution passed on party lines in the Senate Budget Committee. Republicans are hoping to pass a tax overhaul through budget reconciliation, which would only require 50 Senators to pass the bill with Vice President Mike Pence breaking the tie. They’ve set a rough deadline of Nov. 13 to draft a tax bill.
President Trump can only afford to lose two Republican votes in the senate to pass the bill. In a series of tweets Sunday, he feuded with lame-duck Republican senator Bob Corker, who’s wary of the GOP bill, potentially making the path to tax reform even narrower.
…Hence, I would fully expect Corker to be a negative voice and stand in the way of our great agenda. Didn’t have the guts to run!
— Donald J. Trump (@realDonaldTrump) October 8, 2017
Goldman Sachs chief economist Jan Hatzius estimates that the current Senate proposal would cut about $1 trillion in corporate and personal income taxes over ten years. That cut could estimate growth by 0.1% to 0.2% from 2018 to 2019, and by smaller amounts subsequently. In the medium term, GDP would rise by 0.5% and unemployment would fall by 0.1% to 0.2%, with core inflation rising less than 0.1%.
On the other hand, he assigns a 33% chance that the Senate comes up with “no meaningful package at all,” he wrote Saturday. That’s a view shared by Merrill Lynch economists, who “do not expect comprehensive reform this year or next,” noting that the current tax proposal is vague on details regarding “how the cuts will be offset by closing loopholes.”
It’s a shame the White House has become an adult day care center. Someone obviously missed their shift this morning.
— Senator Bob Corker (@SenBobCorker) October 8, 2017
On Friday, the Bureau of Labor Statistics reported that the economy lost 33,000 jobs in September, the first job decline in seven years, while economists expected the economy to add 85,000. The losses were chalked up to damage from a series of hurricanes battering the U.S. last month. Wages were up and the unemployment rate fell, and the Federal Reserve will likely ignorethe disappointing report in making its interest rate decisions.
It’s a busy week for financials, with Citigroup Inc. (C) and JPMorgan Chase & Co. (JPM) reporting earnings on Thursday, followed by Bank of America Corp. (BAC) , Wells Fargo & Co. (WFC) and PNC Financial Services Group Inc. (PNC) on Friday.