Trump’s dinner last night could tip a new tax cut plan coming tonight

Tuesday’s post will have some high-octane speculation dealing with tonight’s State Of The Union speech by President Trump.

First all the major stock indices jumped in the last 5 minutes of trading Monday. For instance the Dow Jones rose almost 100 points as traders banged the close.

This could mean that a rumor went through the market that professionals wanted  in before the news broke.

Second bit of news: President Trump and Treasury Secretary Steven Mnuchin had dinner at the White House with Federal Reserve chief Jerome Powell and Fed Vice Chairman Richard Clarida.

While the president has taken the Fed chief to task in the past on Twitter for his overzealous rate rising plan, this was the first time since Trump appointed Powell that the two met in person at the White House, according to the Federal Reserve spokesperson.

So I understand that the president would probably not have a State Dinner scheduled for the night before the SOTU, but its curious these four would get together for a White House dinner prior to the speech.

That is unless the conversation was to brief the Fed leaders on a change in fiscal policy, which would impact the Fed’s monetary policy.

So my speculation is that we will see another tax cut proposed by the president in the speech. It may be on both the corporate and the personal sides. This makes sense since his first tax cut has worked its way through the economic cycle, and he could use the bump going into 2020 with a mid- to late-year stimulus plan.

How any legislation from the White House would get through the House in this election cycle is problematic at best. However, if the Democrats in the House deny a tax cut leading up to 2020, that could be the death knell for the party in 2020.

We will see in a matter of hours whether I am right.

Stay tuned

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