March 03, 2019

Looking a the Trump and Obama Administration in the context of the secular trend in keep rates the data one has to wonder whether the Obama administration tax rate increase was a blip on the long-term secular trend or whether the Obama Administration tax rate increase marks the beginning of a new secular trend and the Trump tax rate cuts is a blip on the new secular trend? Which of the two scenarios plays our will depend on the outcome of the 2020 election. In an age of polarization, it seems safe to assume that a split decision will maintain the status quo without any significant changes. Therefore, a sweep by one of the political parties is a necessary precondition for a change in keep rate. The 2020 election is going to be extremely important. Depending on the outcome, it will have vastly different implications for the future path of the economy and financial markets.

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