by Gary Alexander
April 12, 2022
Four weeks ago, I wrote an article here titled, “Beware the Ides of March.” I did not mean to imply that the stock market would soon fall. In fact, the S&P 500 turned on a dime and gained 11% starting on March 15 (the “Ides of March”). Instead, my article forecast the high inflation figures released that day.
In fact, March was a tale of two markets – falling the first two weeks, then soaring the next two weeks:
- The S&P 500 lost 4.6% from March 1 to March 14, then it gained 11% from March 15 to 29.
- NASDAQ was even more extreme, losing 8.5% March 1-14, then gaining 16.2% March 15-29.
Well, now I’m back to tell you that late April will also likely deliver a strong stock market, partly due to the start of earnings season and partly a post-tax deadline relief rally, when you know how much money you have left to invest, added to the general lilt of Spring, warmer weather, baseball …and no face masks!
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
But be warned that today and tomorrow will likely deliver the highest monthly inflation figures in the last 40 years, so “Beware the Ides of April,” certainly a time of some pretty bad news in American history…
- The Civil War began and ended this week, with the siege of Fort Sumter in South Carolina on April 12-14, 1861, then the assassination of President Lincoln on “Good Friday,” April 14, 1865.
- The S.S. Titanic hit an iceberg April 14, then it sank early on April 15, 1912.
- On April 12, 1945, the nation’s beloved President Franklin D. Roosevelt died in Warm Springs, Georgia. The next two days, a train slowly moved through the south taking his body back to DC.
- On April 13, 1970, Apollo 13 experienced near extinction in space after an oxygen tank exploded, 200,000 miles from home. After saying, “Houston, we have a problem,” they invented a solution.
- April 10-14, 2000, saw NASDAQ fall over 25%, from 4446 on Monday to 3321 on Friday.
For most of us, the biggest bugaboo in mid-April each year is the looming April 15 tax deadline, which is extended to Monday, April 18 – or Patriot’s Day in Boston, the day the American (anti-tax!) Revolution began – or you can extend your filing to October 15 if you pay all taxes now and file for an extension.
To confuse matters further, April 15 is Good Friday, with the market closed for the beginning of Easter weekend and (for once) that date also coincides with the start of Passover season (April 15-23 this year).
So, with all that calendar business out of the way, let me pass over today’s gigantic inflation statistics for the moment and tend to the ridiculous ideas now surfacing for taxing you more. I began this discussion last week with the ludicrous 20% wealth tax, which will never pass. Now, let’s look at the bigger picture.
There is No Need for a New Tax Bill – Tax Revenue is Pouring In!
Over 40 years ago, in 1980, I wrote a book bemoaning our first $1 trillion in public debt. By 1990, our national debt reached $3 trillion, then $6 trillion by 2000. It’s now $30 trillion. President Biden’s new budget calls for a staggering $5.8 trillion in spending in fiscal 2023, starting next October 1. That is 31% more than the last full-year pre-pandemic Trump budget in 2019. To “pay for it,” Biden wants to increase our taxes, but tax revenues are already pouring in like Niagara Falls due to 7% GDP growth last year.
In the first five months of fiscal 2022 (October 1 through February 28), total federal receipts climbed 26% from the same five months a year earlier. Tax collections are rising from every source: Corporate tax collections are up 31% in those five months. Individual income tax revenues rose 38% in those months.
Fiscal 2021 also brought huge increases in tax receipts. FY 2021, which ended last September 30, brought in federal taxes of $4.05 trillion, an 18% increase over FY 2020, the largest annual increase in 50 years.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The Congressional Budget Office (CBO) estimates that taxpayer revenue will grow another 12% this year to $4.53 trillion, well above inflation rates – so just rake it in, Uncle Sam. Don’t change a winning plan.
The stimulus checks have ended, and so have most emergency unemployment checks, so those costs are down. Just quit drafting new grandiose plans for throwing “helicopter money” at favored voter groups this year. With interest rates rising, this would only increase the burden of servicing our rising federal debt.
Look at how rapidly corporate taxes are set to grow under the CURRENT tax law:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
New ideas we don’t need. A 20% (or even 2%) wealth tax is a paperwork nightmare as well as a wealth-killer. Janet Yellen’s “Global minimum corporate income tax” was a Hindenburg blimp of an idea that deservedly flew into an electrical storm of protest last year, but it has been revived this year, so let’s kill it again. The new 1099-K forms will become micro-tax seeds for Venmo, Uber, PayPal, or Airbnb chits. It’s all too much work for an IRS that won’t even answer its own 800-line, much less for confused taxpayers.
So let’s stick with a winning system that’s now rolling in dough. The tax law ain’t broke – so don’t fix it.
P.S. Monday morning second thoughts: Scratch that wimpy conclusion. The tax code is plenty broken. It should be trash-canned and re-written as a simple 1-page flat-rate tax (20% of gross income after the first $10k so the poor pay nothing). But until that day, we’ll send huge checks to the IRS, so here’s my plea:
“Dear Congress: Please don’t add to this tax mess. Don’t make it worse, and don’t make me think about it anymore. Just stick the gun in my ribs and I’ll pay your protection ransom to stay out of jail, but please don’t insult me by saying I’m not ‘paying my fair share.’ A simple ‘thank you’ would be more polite.”
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Why Global Growth is Grinding to a Halt
Income Mail by Bryan Perry
Today’s Rate Shock Helps LNG Shine as a “Best Hedge”
Growth Mail by Gary Alexander
Forget March! Beware the “Ides of April”
Global Mail by Ivan Martchev
Is the Fed in “Panic” Mode?
Sector Spotlight by Jason Bodner
When to Sell Great Stocks…? (Perhaps Never)
View Full Archive
Read Past Issues Here
About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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