AG never actually endorsed the tax cut. He simply said that tax cut, to paraphrase, "was a distant water that may not be used in good time to save close fires", working with a one year or longer time lag, and by then a recession may be already over anyway. In the AG way, he never said the recession was already here. Read another way, a recession may work its way through the system even without a tax cut, and we are not sure we are in a recession anyway.
AG also said, again to paraphrase, that should the current surplus assumptions hold (they will not hold even 30 day old milk), then there is enough numbers in the system to accommodate a tax cut as well as paying down the debt, and it is slightly better to pay off the debt (as the surplus is misleading and illusory Social Security accounting).
AG basically said everything except "I think a tax cut will do less than nothing and is not affordable".
The markets, in their gradual realization, are saying "we do not believe the interest rate cut will do anything for the lightness of the bubble, we believe a tax cut will do even less, and so we will give back all the gains since the start of the year, thus pricing in and fully discounting for the coming rate and tax cuts".
If true, the markets have been discounting the fabled multiple rate cuts (maybe another 150 basis points) and the 1.odd trillion dollar tax cut. Supposing that the markets would have gone down even more without the earlier 100 basis pts largess and the talk of tax cut, then in a variation of "buy on rumor, sell on facts", the market indices may simply sell off more when the next rate cut and the tax cut comes through as promised.
Cisco, based on its technology, OEM, and acquisition in lieu of R&D model, could not have achieved what it did without the lightness of the AG bubble. Now that the bubble is dark, so will the pulses be within Cisco's boxes, and with it, the Cisco valuation. Inflection points are inflecting and destructive, with wide area splash damage. |
