December 25, 2017 Market Outlook

Investors are Wishing 2017 Won’t End

A combination of very healthy fundamentals — strong economic and profit growth — together with the enthusiasm about the Republican tax overhaul caused the euphoria on Wall Street. Investors are anticipating the lowered corporate tax rate and incentives to return overseas profits could spur a wave of share buybacks. Stocks would look even more attractive.

Unlike the chaotic situation with bitcoin, 2017 is a merry year for the stock market. The Dow Jones is poised to have the best year since 2013. The blue-chip index is up by an impressive 25%. The broader S&P 500 is also on fire. The index is also on track for its best performance in four years as it rocketed by 20% this year. similarly on track for its best performance in four years. The tech-heavy Nasdaq surged nearly 30%.

Amgen Sees Tax Expense of $6.0 Billion with New Tax Law

Drug maker Amgen Inc. (AMGN) estimates to incur tax expenses between $6 billion to $6.5 billion over time as it repatriates cash it has gathered around the world because of the newly enacted U.S. tax law.  The company said thatsome of the expense is also due to the revaluation of its tax liabilities as mentioned in their filing with the Securities and Exchange Commission.

Amgen did not disclose how much of its $38.9 billion in cash and other holdings it intends to move back to the United States. The law signed by President Donald Trump last Friday sets a one-time tax repatriation rate of 15.5% for cash and cash-equivalents and 8% for illiquid assets. The said rate is an attempt to encourage U.S. companies to bring home the more than $2.6 trillion now held overseas.

Lower Excise Tax for Cider and Craft Beer Makers

The makers of craft beer, artisanal spirits, hard cider and mead in the U.S. will pay less excise taxes next year due to a certain provision in the sweeping tax overhaul passed by the U.S. Congress. Sections 13801 through 13808 in Part IX of the tax bill grants sharply lowered excise taxes on liquor or alcoholic beverages made by small producers.

One provision also set up the first statutory definition of mead, an alcoholic beverage made of fermented honey. Small craft producers are a rapidly growing category of the alcoholic beverage industry in the United States. Sales of craft beer alone were $4.8 billion in the 12 months ended in January, according to data from Nielsen Holdings.

Real Valuation of Bitcoin Seen When Hype Dies Down

Many are still unsure how to value the world’s most popular digital currency. People are having difficulty determining Bitcoin’s real value because there are no fundamentals to begin with. However, analysts believe that some real value may be created once the hype around cryptocurrencies dies down.

Bitcoin’s price peaked to $19,666 on December 17, but sharply dropped by as much as 31.8% on Friday to a low of $10,775 per coin. It pared some of its losses on Friday morning and Saturday to climb above $16,000 again. It slipped to just below the $14,000 mark on Sunday.

Toy Makers Hurting Due to Lower Prices

While toy makers are all selling more on Inc. (AMZN), profits are depressed because they’re often selling at lower prices. The Toys “R” Us bankruptcy is not helping the industry too. Hasbro, Jakks Pacific, and Mattel each generated nearly 10% of their overall sales from Toys “R” Us in their most recent fiscal years.

Without new ‘hits’ or stalwart franchises, toy makers are finding it difficult to outsell the latest craze which is the Hatchimals. Canada’s Spin Master is the only traditional toy maker that is doing well. The company owns the super popular line of Hatchimals toys. This toy line pushed its stock to surge more than 60% on the Toronto Stock Exchange this year.

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