Barack Obama in an attempt to reinvigorate his presidency and the economy has presented to the congress a jobs plan. The $450 billion price tag is larger-than-expected.
The plan proposes to reduce payroll tax paid by employees to 3.1% in 2012 from the 4.2% level temporarily introduced this year. As it stands now, without this plan, this tax would revert to its traditional rate of 6.2%.
The plan will also reduce the payroll tax paid by the employers from 6.2% to 3.1%, with a limit of the first $5m of wages. Further, employers hiring new workers or increasing salaries will be exempt from payroll taxes on the higher payroll.
The plan also calls for the establishment of an infrastructure bank funded with $80bn.
The plan also proposes finding ways to help homeowners take advantage of low mortgage rates.
As my long time readers know, the point of my articles is to help readers make money. As always, I will refrain from making comments that have no bearing on generating profits. Here is my plan to make money from his speech:
·The plan has a very heavy emphasis on tax cuts. This portion of the plan is likely to pass the Congress. Consider buying Monster Worldwide (MWW), LinkedIn (LNKD), Automatic Data Processing (ADP), and Paychex (PAYX).
·The plan that ultimately passes is likely to include aid for states and local governments. Consider buying a municipal bond ETF such as MUB.
·The infrastructure portion of the plan is least likely to pass the Congress. Infrastructure stocks have run up in anticipation of the speech. Consider short selling Vulcan Materials (VMC), Martin Marietta Materials (MLM), KBR (KBR), Granite Construction (GVA), and Jacobs Engineering Group (JEC). Especially in short selling proper timing of the purchases can make a big difference in the profits that are ultimately realized. Proper timing of the purchases can make a big difference in the profits that are ultimately realized. Please consider using a proven method such as ZYX Change Method to time the purchases.
·One of the consistent ways to make money is to figure out how the street is positioned before an event, and take the opposite side at the earliest sign of the street being wrong.‘The street’ is simply a phrase that represents majority of trading houses and institutions. At The Arora Report we have designed algorithms to detect the street’s positioning. The street is positioned for the market to fall after the speech. If the market starts going up and buying by smart money is detected it will be the start of short covering. In such an event, for a short-term trade, consider buying SPY, DIA, QQQ, SSO, and SDS.
Disclosure: I am long MWW, QQQ.
Additional disclosure: I plan to initiate positions is one or more of all of the stocks mentioned in this article in the next 96 hours and at the appropriate time I will provide signals in the real time to my subscribers.