“He's already demonstrated a willingness to stray from his base,” said Jim Iuorio of TJM Institutional Services. “He will mention corporate tax reform. He has moved to the middle and he seems quite comfortable there.”
Policy newsletter the DC Tripwire points out that “White House officials continue to signal interest in a tax code overhaul, especially corporate taxes.” They point out that Treasury Secretary Tim Geithner met with the CFOs of Honeywell, Cisco, Johnson & Johnson, Coca-Cola, WalMart, Exxon, PepsiCo, Microsoft, Procter & Gamble, Bank of America, Caterpillar, Disney and Eli Lilly a week ago.
This multinational group points one back reforming the tax on foreign profits. There was a repatriation tax holiday put in place in 2004. The 25 companies that repatriated the most funds (as a percent of their market capitalization) that year outperformed the S&P 500 by 14 percentage points in 2005, according to Strategas.
“Don't expect this to be a rally speech for corporate America,” said Stephen Weiss of Short Hills Capital. “Rather, that will be the read-through as every point he makes will lead to jobs and America's competitiveness.”
To be sure, many traders and investors believe that after extending the Bush tax cuts and finally moving his popularity in an upward trajectory, the President will not specifically hint at something so bold (to his base at least) as a tax break for companies.
“I would be shocked,” said Dennis Gartman of The Gartman Letter. “Were the President to take on corporate tax reform, that would send his base into fits of hysteria. Tonight he'll talk about ‘investments’ in the future, and that means spending.”
* For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.
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Trader disclosure: On Jan. 25, 2011, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Terranova Owns (UPL); Terranova Owns (VRTS); Terranova Owns (PVH); Terranova Owns (GM); Terranova Owns (CVI); Terranova Owns (CNQ); Terranova Owns (LTD); Terranova Owns (C); Terranova Owns (PEP); Terranova Owns (CPX); Terranova Owns (ARUN); Terranova Owns (MS); Terranova Owns (RSH); Terranova is short Gold; Terranova owns (POT); Terranova owns (CRM); Terranova owns (FCX); Brown owns (AAPL); Brown owns (BAC); Brown owns (C); Brown owns (GLD); Brown owns (GDXJ); Brown owns (GOOG); Brown owns (JPM); Brown owns (MSFT); Brown owns (QCOM); Brown owns (WFC
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