The devil’s in details of the Senate tax bill, Mueller investigation goes after Trump’s bank records, and Brexit is complicated. Here are some of the things people in markets are talking about today.
Tax bill hits tech
The law of unintended consequences hit tech stocks as the tax bill passed by the Senate on Saturday may have unwittingly created a situation where planned tax breaks related to intellectual property and capital spending could be rendered worthless. The bill keeps the existing alternative minimum tax for corporations at 20 percent on par with the new headline rate. That means companies will not be able to use other tax breaks to lower their effective rate. The proposed legislation itself now moves on to the conference committee which will negotiate a final bill between the House and GOP Senators.
Special prosecutor Robert Mueller’s investigation into alleged Russian meddling in the U.S. election has widened to President Donald Trump’s business dealings, with Mueller issuing a subpoena to Deutsche Bank AG to get information on Trump’s relationship with Germany’s largest lender, according to a person briefed on the matter. Last week’s guilty plea from former national security adviser Michael Flynn led to calls to accuse the president of obstruction of justice, a crime his lawyers say is impossible to charge him with.
Yesterday’s dramatic Brexit developments seem to have pushed the U.K. government into a corner after a deal that seemed to be ready for ink was pulled at the last minute due to opposition from Northern Ireland’s Democratic Unionist Party, on whom Prime Minister Theresa May relies for a parliamentary majority. While the DUP rejected any special status for Northern Ireland after the U.K. leaves the European Union, leaders in other U.K. regions, and the mayor of London, said they may seek special status for their own areas, compounding May’s political headaches at this crucial point in negotiations. Meanwhile, the clock is ticking for business leaders who say their planning horizons are rapidly vanishing.
Overnight, the MSCI Asia Pacific Index dropped 0.1 percent, while Japan’s Nikkei 225 Stock Average closed 0.4 percent lower as tech stocks in the region faced further selling. In Europe, the Stoxx 600 Index was 0.4 percent lower at 5:45 a.m. Eastern Time, with tech again leading the declines as positive regional PMI data failed to boost stocks. S&P 500 futures were broadly unchanged, with Nasdaq futures dropping 0.3 percent. The 10-year Treasury yield was at 2.376 percent and gold was sightly higher.
The U.S. Supreme Court handed President Trump a major victory when it allowed his ban on travel from six mostly Muslim countries to take immediate effect, with only two justices on the court dissenting. The restrictions, which also include North Korea, will remain in place while further legal challenges to the order go forward. The immigration issue hangs over efforts to avoid a government shutdown before year end as Senate negotiations stall over plans to provide deportation protection for 800,000 young undocumented immigrants.
What we've been reading
This is what's caught our eye over the last 24 hours.
- China likely to overtake the U.S. as world’s largest importer within five years.
- Mortgage banks in firing line as Basel readies capital rules.
- How AI will invade every corner of Wall Street.
- What shuts down during a U.S. government shutdown.
- America crowns a new pollution king.
- How not to run a sovereign wealth fund.
- Baltic Dry!
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