U.s. Tax Policy Could Send Us Back Into A Recession Commodity Strategy Should You Be Playing?

By Author: Commodity Strategy
Total Articles: 4
Comment this article

The U.S. government is once again butting heads over the extension of the Bush era tax cuts. Last year President Obama signed into law an extension on 1 year for all Bush era tax cuts. Once again they are about to expire and our law makers have to vote on whether or not to extend them. Last time I checked the economy was not doing so hot and we need all of the tax relief we can get to stimulate our lagging economy. Democrats and Republicans are once again in disagreement on whether or not to extend the tax cuts for the top income tax bracket, or as Obama refers to them as the richest one percent.
Congress has not even voted on the matter yet and it is already having an effect in the marketplace. Uncertainty surrounding tax policy has many Americans not spending. They are unsure whether or not they will have to pay more to Uncle Sam next year so they are holding off on spending and investments this year. The Democrats only want to allow the top tax bracket cuts to expire. They believe those who are successful deserve to pay more. Republicans are of the belief that taxing the top earners will take investment capital out ...
... of our slow economy. The top 1% are the job creators and tax them more will mean they have less to invest in businesses. We cannot measure at this time the effect a tax increase on the top earners will have on our economy.
I do know that taxes have a large effect on business decisions and that if we see a tax increase we will see some loss of investment capital. The top tax bracket is not just made up of millionaires. The top tax bracket includes those with an income in the mid to high six figures, and an increase of 4 or 5% on their federal income taxes will affect their business and spending decisions. An increase in of Federal income taxes can create opportunity in the marketplace. With a slow economy and anti-growth tax policy we can most likely expect some sort of dip in the stock market. A futures strategy to take advantage of a decline in the stock market would be to trade futures or options on futures of the U.S. equity indexes. This futures strategy allows an investor to actually trade an entire market rather than an individual stock. Many commodity trading companies trade this commodity strategy because it allows them to trade based on macro data, such as employment number and GDP. Another commodity strategy would be trading interest rates. For more details please log on to www.cedarassetmanagementllc.com