{"id":111589,"date":"2017-08-24T10:16:33","date_gmt":"2017-08-24T14:16:33","guid":{"rendered":"http:\/\/countingpips.com\/?p=111589"},"modified":"2017-08-24T07:17:50","modified_gmt":"2017-08-24T11:17:50","slug":"size-matters-with-this-trump-fueled-opportunity","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/08\/size-matters-with-this-trump-fueled-opportunity\/","title":{"rendered":"Size Matters With This Trump-Fueled Opportunity"},"content":{"rendered":"<div id=\"inves-3804120944\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">August 24, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/08\/0817_taxreform_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/08\/0817_taxreform_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/08\/0817_taxreform_feature-300x155.jpg 300w\" alt=\"Size Matters With This Trump-Fueled Opportunity\" width=\"580\" height=\"300\" \/><\/p>\n<ul>\n<li>Market action shows that size matters right now\u2026<\/li>\n<li>Trump\u2019s latest efforts to trigger small-cap rally.<\/li>\n<li>What if the tax cuts aren\u2019t passed?<\/li>\n<\/ul>\n<hr \/>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-louis-basenese.jpg\" alt=\"Louis Basenese\" \/>When it comes to the stock market action of the last 12 months, size matters.<\/p>\n<p>As you know, fueled by post-election enthusiasm, stocks of all sizes rose in the U.S. as investors bet big \u00a0on economic growth.<\/p>\n<p>But small caps led the pack, by far.<\/p>\n<p>In the two-week period following the election, the small-cap benchmark Russell 2000 index rose as much as 15% \u2014 more than twice the gain of the large-cap S&amp;P 500 over the same period.<\/p>\n<p>However, over the last six months, a quiet divergence has emerged in the stock market\u2026<\/p><div id=\"inves-3496366348\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>Small caps have dropped 2% while the market\u2019s biggest stocks have gained 4%.<\/p>\n<p>But as senior analyst Jonathan Rodriguez argues below, it\u2019s time to load up on small caps in a big way\u2026<\/p>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <em>Wall Street Daily<\/em><\/p>\n<hr \/>\n<h2 class=\"centered headline\">A Turning Tide<\/h2>\n<p><img decoding=\"async\" style=\"float: left; max-width: 85px;\" src=\"https:\/\/duip7hn7nchpo.cloudfront.net\/editor-circle-jonathan-rodriguez.jpg\" alt=\"Jonathan Rodriguez\" \/>So far, President Trump has struggled mightily to get the ball rolling on his legislative agenda.<\/p>\n<p>To be sure, the president has signed more than 40 bills into law \u2014 and issued as many executive orders.<\/p>\n<p>The big-ticket stuff he ran his campaign on, however, has yet to come.<\/p>\n<p>I\u2019m talking about defense, infrastructure and tax reform.<\/p>\n<p>And the all-but-certain death of TrumpCare has spooked the financial markets into believing that all his other proposed bills will fail, too.<\/p>\n<p>But it\u2019s far too early to make that call.<\/p>\n<p>As I noted in <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/08\/23\/trump-trade-back-dead\/\"><strong>yesterday\u2019s column<\/strong><\/a>, tax reform, the next piece of Trump\u2019s legislative package, is about to be taken up by Congress.<\/p>\n<p>And after a bruising battle on health care ending in an ugly, public defeat, Republicans will be far more likely to work with Democrats to get the win here.<\/p>\n<p>Here\u2019s how a tax-reform victory sets up small caps for a major rally\u2026<\/p>\n<h2 class=\"subhead\">The Truth About Taxes<\/h2>\n<p>As you may know, small American companies rely heavily on domestic sales while most large companies generate a fair amount of their revenue overseas.<\/p>\n<p>This has a huge effect on their tax burdens.<\/p>\n<p>According to Lori Calvasina, small- and midcap U.S. equity strategist at Credit Suisse, the effective tax rate for the Russell 2000 is 32% while the S&amp;P 500 rate stands at 26%.<\/p>\n<p>If the tax rate comes down to 15%, small caps could see a whopping 50% increase in post-tax profit. That\u2019s against a 42% increase for large caps.<\/p>\n<p>At 29.6 times forward earnings, small caps aren\u2019t cheap on a bottom-line basis compared with large caps (18.7).<\/p>\n<p>But the Russell 2000 trades at just 1.1 times forward sales \u2014 a 45% discount to the S&amp;P 500 (2.0 times).<\/p>\n<p>And small caps trade at 1.9 times forward book value \u2014 37% lower than their large-cap peers.<\/p>\n<p>Of course, there is a chance that the tax cuts don\u2019t pass.<\/p>\n<p>But because the market is overestimating failure and selling off small caps broadly, these issues can be scooped up at a steal.<\/p>\n<p>According to data from Credit Suisse, the sectors that pay the most in taxes are the telecommunications, utilities and consumer discretionary.<\/p>\n<p>If you\u2019re after the biggest small-cap pop on tax reform, these are the names you want to buy now.<\/p>\n<p>On the hunt,<\/p>\n<p>Jonathan Rodriguez<br \/>\nSenior Analyst, <i>Wall Street Daily <\/i><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/08\/24\/size-matters-trump-fueled-opportunity\/\" rel=\"nofollow\">Size Matters With This Trump-Fueled Opportunity<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com Market action shows that size matters right now\u2026 Trump\u2019s latest efforts to trigger small-cap rally. What if the tax cuts aren\u2019t passed? When it comes to the stock market action of the last 12 months, size matters. As you know, fueled by post-election enthusiasm, stocks of all sizes rose in the U.S. as [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-111589","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/111589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=111589"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/111589\/revisions"}],"predecessor-version":[{"id":111607,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/111589\/revisions\/111607"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=111589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=111589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=111589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}