Let’s Make a Deal

Weekly Market Update | November 1, 2021


Global equities (as measured by the MSCI AC World index) gained 0.4% last week – just 3 points shy of their all-time high. In the U.S., the S&P 500 rose 1.3% while the NASDAQ jumped by 2.7%. Non-U.S. markets underperformed with European stocks eking out just a 0.1% gain and Emerging Market stocks dropping 2.2%. The 10-year U.S. Treasury yield fell from 1.63% to 1.55% by the end of the week.

President Biden outlined a potential framework for his Build Back Better social spending bill. The bill would potentially include $1.75 trillion in spending on clean energy and climate change, childcare and preschool, earned income tax credits, housing, and several other investments. These investments would be potentially offset by $1.995 trillion of revenue raisers. However, estimates from the Penn Wharton Budget Model suggest that actual revenues may fall about $450 billion short of the White House’s estimates.

Notably absent from the framework were changes to the top corporate, capital gains, and individual tax rates. Instead, the focus is now on a 15% minimum global corporate tax, stock buybacks tax, taxes on wealthy individuals, and IRS tax enforcement. Technology and large Pharmaceutical companies may be the most exposed to a global minimum tax.

A strong October employment report could help to ease slowdown fears.