"There's a reason tech has been the worst performing sector this week as the tax bill makes its way through Congress — it's the sector that benefits the least...Goldman analysts recently put tech at "neutral weight" from overweight"
"JPMorgan's quant strategists fired off a warning this week that growth and momentum names could be hit by a continued rotation on passage of tax reform or even just speculation about it."
On a related economic note, I stumbled across this timely yet intellectually challenged essay by Dallas Money Printing President, Kaplan. It's half right to the extent that it points out eight years of accumulated risk. However, like most economic commentators, he can't bring himself to acknowledge the true origins of cheap capital. Why? Because the tsunami of self-bankrupting poverty capital is de facto evidence of the abject failure of Globalization. To acknowledge it would nullify his entire life's work which consists of papering over mass bankruptcy. He can walk to the edge, but can't peer over the cliff.
Here is the key takeaway:
"Taking all these factors into account, and from a risk management point of view, I believe it will likely be appropriate, in the near future, to take the next step in the process of removing monetary accommodation"
Which is where this delusion gets interesting. Let's say today's dunces actually believe that giving Bill Gates more money will augment GDP growth. Then, as just implied by Kaplan, a realized tax cut means that monetary policy will normalize more quickly. Something that Yellen herself has pointed out several times. Which is why 300 P/E growth stocks got annihilated last week: A higher discount rate means that Amazon's imaginary profits twenty years from now have a much lower present value. Which means that the rotation into cyclicals is about to go further banzai. But unfortunately, those stocks are already massively overbought at the end of the cycle.
You know, like last time:
Which means that gamblers are rotating into cyclical junk at the end of the cycle. While the five largest stocks in the casino go bidless...
All because they believe in something that can't even exist due to their own dumbfuck actions...
