US Equity and Economic Week in Review: The Tax Cut Proposal Is a Potential Short-Term Game Changer

            This week’s big news was the administration’s tax cut proposals, which would lower the top individual rate, cut the corporate tax rate to 20% and eliminate the estate tax.  The markets interpreted this development positively bidding up equities and selling treasuries.  Standard economic theory states lower taxes are inherently stimulative.  In other news, the BEA released their final estimate of second quarter GDP, which grew 2.2% Y/Y.  New orders for durable goods rose.  While new home sales fell, negative impacts of Hurricanes Harvey and Irma most likely skewed the results low