Tax reform will help mid-cap stocks

0
303
Tax reform will help mid-cap stocks


As the GOP released its final version of the long-awaited Republican tax overhaul, CNBC’s Jim Cramer told a caller that mid-cap stocks would “absolutely” benefit from the bill.

The proposed plan would include tax cuts for corporations, lower rates for individuals and altered tax deductions.

Supporters of the bill argue that corporate tax cuts will spur business investment, hiring and economic growth.

“Mid-caps tend to be domestic, so you’re not dealing with companies that have far-flung operations that won’t benefit from a lower corporate tax rate,” the “Mad Money” host said. “I think you’ve got real horse sense.”

But with little reaction from the bond markets to the tax plan’s proceedings, another caller was concerned that a flattening yield curve could spell trouble.

“First of all, we know … we want the Federal Reserve to dump its bonds. I’m not kidding. We need a little of what’s known as inflection so the banks will get money from your deposit, lend [it] out and make a little more money so they’ll do more lending, because lending’s actually gone down in the country,” Cramer responded.

The “Mad Money” host also advised the caller to keep an eye on the action across the Atlantic.

“Secondly, we’ve got some European inflation numbers that, if they’re not hot, Europe will keep its rates low. And I’ve got to tell you, its rates are so low that people keep putting their money here, which keeps our rates down,” he said.

“Finally, I’ve got to tell you, this market is immune to what they’re doing in Washington,” Cramer continued. “The economy, I think it’s going to run hot, but there’s still enough slack that there’s not enough demand for money.”



Original Source