Transcript:
Tom Vaughan:
Hello, everybody, welcome to Thursday. The S&P 500 was up .12%. Today, which I know doesn’t seem like a whole lot, but it was actually a really good day, lots of green on the charts. really fascinating day, what was red wasn’t down that much. And then if you look at that small cap stock index, the Russell 2000, that we talked about yesterday, it was up 1.1% today. Again, almost 10 times more return out of the small cap than we’re seeing out of the bigger cap index. And again, that just means that people are feeling more confident, at least investors about what is going on, and we’re seeing money kind of flooding in there. And so really great day for our portfolios. The 10 year treasury bond went up a little bit, but still, that’s exactly what our portfolios are designed for, and man did they really jumped today. So very pleased with that aspect.
We did see one of the catalysts was initial jobless claims. So these are initial unemployment claims, hit 400,000 for the week, that’s the lowest suspend since the pandemic started. So we’re seeing recovery there. It was at 200,000 a week, before the pandemic, so we still have a ways to go to kind of close that gap. So we’ll see how that plays out. But that was one of the catalysts that happened. I think one of the things that’s very fascinating, though, today had to do with kind of this capital gains tax increase proposal. So just to remind you, they’re talking about increasing the capital gains from 20% max, to 39.7%, if you’re at a million dollars or more of income for that year. So again, only matters if you’re over a million dollars. Well, they were talking to Biden, and he said that they’re planning on making that retroactive. That would mean that it would, that 2021, if you had that much income, you would already be paying that higher tax. And so this is very important to the stock market. On one hand, I think this concept of retroactive tax, really probably shouldn’t be allowed. I mean, people have already made decisions, let’s say in February, they sold something, they ended up with a $2 million gain, thinking they’re going to pay 20% tax, and now they’re finding out that if this does pass, and if it is retroactive, it’ll actually be 39% gain instead. So I think that is something that is a bit of a problem. But if you happen to be under a million dollars in 2021, this was actually pretty good news.
Because, let’s say for example, they pass this in October, by the fight, get through all the negotiations, and they actually get this through, which is a big gift, but and then from October, November, December, everybody’s selling everything that has big gains in it. So you would see a lot of volatility and downturn in the stock market. And people would be selling their houses left and right, if they had more than a million dollars worth of gain, because they wanted to pay the 20% rate. So it but by making it retroactive, it doesn’t matter, unless you had to do it last year. So unless you have a time machine, you’re you’re locked in on those particular games as far as that goes. And so I think, again, if you’re under a million dollars worth of income in 2021, and they do make it retroactive that’s better for the market. And I would assume, actually, that the market is responding positively to that, because this is something in the past, when they’ve raised capital gains rate and not made it retroactive, you’ve seen an awful lot of churning going on where people are trying to do things to capture that lower rate before the next year starts up when it does start. So again, by making it retroactive, I think that’s a better thing for the stock market. And if you’re under a million dollars, that’s probably a better thing for you as far as that goes. So, we’ll have to wait and see, again, these are proposals. Proposals are proposals, and actual tax law change, there’s a lot of things that that could change before those types of things happen, but but still good news to the market today in that area.
So, again, small caps doing well, spectacular, unemployment claims are better, that’s good. And then we’ve got this announcement that the capital gains rate would already be locked in at the beginning of the year. Again, that’s good for volatility for for the rest of this year, as far as that goes to. So really good market. I mean, things are going very well, right now, very pleased for the last couple of days, how things have gone. So, you know, let’s see what happens. It feels to me again, like things are kind of turning the corner. We did not see the big gains that have kind of the growth side, the ARK stocks and those types of things today. Again, I was talking about to us yesterday, how they had a little bit of a run there, and it was something to look at, the clean energies and all these different areas as far as that goes, just to keep our eyes on, and today they didn’t do very well. So, maybe it’s not there yet, so we’ll have to wait and see.
But nonetheless, that’s what’s happening today. Again, any questions you have, you can send them in to asktom@golivewithtom.com on Fridays from 12:15pm to 1:00pm. We have this live stream, it’s really fun. Got I’ve already got a couple questions in we’ll be answering, on Friday that I think are really interesting actually. So, look forward to talking to you then and we’ll talk to you tomorrow with the daily market update. Thank you very much.