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— This is the script of CNBC's news report for China's CCTV on August 23, Wednesday.
Politico reported on Tuesday that according to five sources familiar with behind-the-scenes talks, the Trump administration and key congressional leaders had reached a broad consensus on some key tax reforms issues.
As we all know, the Trump administration had always wanted to implement tax cuts on individuals and companies yet there always remained a controversial issue on how to make up for this tax cut. Indeed, according to the report, Trump and various congress leaders had reached consensus in addressing some options.
In terms of personal tax, the options included capping mortgage interest deduction of home-owners and scrapping people's ability to deduct state and local taxes. In terms of corporate tax, it was to abolish businesses' ability to deduct interest. Though, for small businesses, "extra grace" would be shown through the phasing in of so-called full expensing for small businesses. In other words, to reduce taxes for small enterprises, they are allowed to treat equipment or facilities investments as expenses.
Whether this current development can translate into an actual tax plan that can pass both the House and Senate remains an open question. Yet as compared to the short statement released in July, this development could be regarded as a major step forward, as at least the Trump administration and members of Congress could reach a "consensus" on these key issues.
It is precisely the word, "consensus", that boosted overall market confidence. Yet, in an interview with CNBC, analysts are still maintaining a cautious attitude towards the tax reform, as there are still lots of uncertainty.
[Michael Gayed, Chief investment strategist, Pension Partners] "But I will be careful about this excitement about this tax reform, if anything we have seen this year here in the U.S is that Trump doesn't seem to be able to get much done purely because he can't seem to work together with his colleagues. He is too busy getting distracted on Twitter than actually making policies and working with others. As much as there must be some excitement about the tax reform, actual implementation is a big question."
As a result, the dollar rose overnight alongside the three major U.S stocks. Also, defense stocks rose, following Trump's recent address in inability for quick Afghanistan withdrawal.
Tracking the overall US aerospace and defense industry, ETF Fund ITA rose by 1.15%,
While Boeing stocks rose by 1.73% percent overnight. And in the after-hours trading, Boeing also continues to rise slightly.
While the dollar boosted, gold prices fell slightly. We will continue to keep watch.
CNBC's Qian Chen reporting from Singapore.