Cramer: The Inflation Reduction Act is actually a tax on companies and shareholders
If you hate global warming, you’ve got a big win this weekend with the Inflation Reduction Act. But if you care about the stock market and inflation, the Spend Our Way to Oblivion Act, or SOWOA, has hit you hard. In real life, I might be an environmentalist first. But in this second life that says I want to help people make money, it’s actually SOWOA – as said by my friend John Ellis, who runs the fantastic news item newsletter. Bill is positively Orwellian. I’m a big fan of George Orwell, and while he really only gave us “1984” as an explanation for 2022, you can read “Tribute to Catalonia” to get a sense of the nihilistic nature of the Democrats, who Really proud of this bill. I say that because it’s really a bill of favor and revenge, a bill against what Republicans believe. It seems like there’s really only one party and that’s one party desperate to spend money we don’t have for nominally cleaning up the environment until, perhaps, that party is thrown out of office on the crucifixion of inflation. goes. Now I know that elsewhere on the CNBC site there’s an awful lot of — and I mean it — praise of the bill as our most important legislation to control climate change. And if so, I’m thrilled. But this is not what you come to me for. Here you come to me for it: On the surface, this is disastrous for many US stocks. a tax on buybacks that affects the way companies actually address capital, a 15% book tax that hurts companies with net operating losses and can raise capital, Medicare negotiations with drug companies, As well as all kinds of questionable gift interests that go against the oil and gas lobby. It’s as if Democrats saw what Republicans gave to business and shareholders and took it away from them. We now know that ultimately there will be less than meets the eye here. There will be only ten drugs that Medicare can negotiate prices by 2026. The market was taking note of several provisions against energy companies. Gifted to electric vehicle manufacturers and actual battery production credits to US companies that will help Ford (F) and General Motors (GM). Look at that, Ford wants it badly. The oil and gas companies were doing what the Democrats wanted. Now they will do it faster or with less money of their own. Farmers get the usual gifts—this time methane, which is actually a subsidy for oil companies selling methane like Chevron (CVX), which has a pilot program for it. Maybe it’s paid for? I think so. In realty, one thing it really does is create precious environmental engineering jobs – or more likely, bid up the price these engineers pay and that’s exactly what we don’t want after Friday’s hot employment numbers. . Some environmental advocacy groups are saying it could provide more than 500,000 jobs. That’s great, but we don’t have people to fill those positions, that’s how you get the kind of wage inflation that burns down the Federal Reserve’s efforts. It would be better to say it’s a tax on companies and their shareholders, but less than needed to cover the new spending that Democrats have been begging for all these years. The bill would most likely cause the S&P to fall. Will this lead to a fall in the stock of medicines? Drug companies have always felt that this Medicare gift was infringing, so even if it’s for show, you’ll find sellers. I would take the other side of trading on Johnson & Johnson (JNJ), AbbVie (ABBV) or Eli Lilly (LLY) on the second or third day – all of which will be affected in one way or another for several years. Let the dumb money out. I think some strategists put together a list or list of companies most hurt by the minimum tax and the tax on buybacks. I’ve seen some reports about what these companies can cost, but they’re almost too subjective to trust. Sadly for shareholders, Sen. Joe Manchin came close to obtaining a provision that would have streamlined the pipeline implementation process and made it more likely to bring our natural gas to markets that are currently overseas—in the Russian Federation. -Using oil, but it failed. The press says it’s going to come, but I don’t believe anything will be passed after this bill – especially something that helps oil and gas. But let’s get into the totality here. The deal is cheap for anyone who isn’t a Republican and punishes whoever is. It’s incredibly partisan and — like the Orwellian Spend Our Way to Oblivion Act — it’s just one more obstacle for the Fed to stop the tightening cycle. Now that commodity inflation is at its peak, we have to deal with labor inflation, and this bill promotes that kind of inflation in an absurd and obscene way, we have no other capacity than to create jobs but take them from the private sector Is. That is what is really at stake. Every time Fed Chairman Jerome Powell gets a handle on inflation, the government throws him for a loop. It’s a true nightmare because of the title alone. There are good hearted people all over the country who want to cut the deficit and can really believe in the naming. There are environmentalists who knew that the market must have taken great care of it. And there are shareholders who are just Patidars, killed by a party that is now so anti-capital that you would believe that there are not only two countries, but two countries when it comes to Rowe Wade and gun control. Share Market; There are a bull and a bear and Democrat bears that live in the North and West and in some places in the Midwest. Now I really don’t want to write any of this. I hate politics. Of course, politics happens in the market, and I am not condoning or condemning it. I am very supportive of anything that can slow global warming or reverse it. But I’m really here to help you and suffice it to say that my job—and your rewards—just got tougher again. It is a belief that the nation has, alas, gone Democratic and what you see is what you got. Will the markets be smart about this at all? I think it suffices to know that this bill raises wages when the Fed is concerned about wage inflation, and upsets shareholders when we’re worried about being worried. I would love to tell you that everything will be green and the deficit is being reduced, but I think there will be spots of green, and some areas that are actually going to be more green. Otherwise, it’s just a series of huge liabilities for companies that were already going to do whatever is needed without federal funds. One last word: Stock-owning Democrats should be just as concerned as stock-owning Republicans because this bill alone could be worth 150 basis points of tightening. But perhaps Democrats think that inflation is okay as long as it only promotes their interests and harms others, mainly Republicans, who have more market share than their party. But Powell knows that inflation knows no party. It’s just disgusting and harmful, although I’m sure it will reduce a percentage or two of greenhouse gas emissions as well. (Jim Cramer’s Charitable Trust is long ABBV, F, JNJ, LLY. See here for a full list of shares.) With Jim Cramer As a CNBC Investing Club client, you receive a trade alert before Jim makes a trade Will happen. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about the stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. 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US President Joe Biden speaks about the Inflation Reduction Act 2022 in the State Dining Room of the White House on July 28, 2022 in Washington, DC.
Mandel Ngan | AFP | Getty Images
If you hate global warming, you’ve got a big win this weekend with the Inflation Reduction Act.
