Before last night's shocking election results from Virginia, the biggest news between the corridors of Washington and Wall Street was a plan for the senate to consider giving corporations a one-time reduction on taxes paid for profits earned abroad. Optimistically, this would be enough to bring back their earnings.
U. S. Senate Minority Leader Mitch McConnell told reporters that Republicans had discussed a corporate tax repatriation "holiday" idea and "it enjoys a good deal of support in our conference." However, opponents say that the one-time repatriation tax "holiday" granted by George W. Bush in 2004, did not work. Drug companies benefited while many corporations repurchased their own stock.
Well, the jobs did go up after the American Jobs Creation Act, which was signed into law in October 2004. The next 12- months saw +2.5 million jobs versus +1.9 million in the preceding 12- month period. GDP growth from 2004 to 2006 averaged 3.6% versus 1.95% in the preceding three- year period. Plus, this time, the honey pot is ginormous! US Corporations have offshore profits north of $2.0 trillion, +93%.
Leading the Pact:
- Apple Inc. (NASDAQ:AAPL)
- General Electric Company (NYSE:GE)
- Microsoft Corporation (NASDAQ:MSFT)
- Merck & Company Inc. (NYSE:MRK)
- Petrobras Argentina SA (NYSE:PZE)
Apple has $156 billion in cash on the books with only $18 billion in the United States. Of course, any deal would mean a compromise, in this case - funding for road construction and repair fund. If a deal is cut, we could be looking at a $100 to $200 billion direct shot into the economy after Uncle Sam takes a cut and corporations buy back stock.
While the equity futures initially looked as though they were going to open in the green, they have since turned slightly negative due to the initial and continuing jobless claims data. Initial claims for last week came in at 317K which was slightly more than the 315K estimate from economists and more than the revised 313K claims (from 312K) noted in the week before. Continuing jobless claims, which is delayed by two weeks, came in at 2.614 million which was less than the 2.638 million-estimate from economists, but more than the 2.603 million from the prior period. All in all, this jobs data was nothing to get excited or worried about.