The markets had a nice run-up in April, so expect things to slow down a bit. The trend is still decisively up, and we do not see this changing anytime soon. There is a mountain of cash on the sidelines that will make its way back into equities. 

Covid-19 cases are dropping and dropping hard in some areas as more and more people are vaccinated. The vaccine clearly works. Speaking of vaccine effectiveness, look at the latest daily cases from Israel in the chart below. The nation had 10,213 cases one day in January, and around 73 daily cases during its most recent reporting day.  That is a >99% decline in cases. Israel exclusively used the Pfizer vaccine, and Israel’s Covid-19 deaths hit zero with almost 60% of their population vaccinated as of Thursday last week. 

I have been asked a lot lately about the Biden administration’s proposal to raise the capital gains tax. Biden’s capital gains tax would be raised to 39.9%, but let’s just round it off to 40%. The US already has the highest capital gains tax rate at 20%, compared to other “financial centers” at 14%. The United States’ capital gains tax rate is already very high compared to comparable financial centers, like Germany, Singapore, Switzerland, and other nations.  

The average of the 14 comparable nations is a 14% capital gains tax rate. Some examples are:
– Germany       +25%
– Singapore      +0%
– Switzerland   +0%
– UK                  +20%
– Hong Kong    +0%

20% is already not competitive.  A 40% capital gains tax rate would make the US non-competitive, and the financial sector is one of the 3 sectors the US dominates globally.  The other two sectors are Healthcare and Technology. Therefore, we do not see capital gains raising to these nosebleed levels. Elected officials like keeping their job, and this is great way to lose that job so odds are that capital gains taxes will rise, but not to 40%.