Don't be fooled. Wall Street, not Main Street, is usually the big tax winner

Walmart is usually closing Sam's Club stores

1. Main Street vs. Wall Street: President Trump has promised of which the tax overhaul will be “fantastic for the middle-income people” of America.

He has cheered the bonuses along with also minimum wage hikes announced by Walmart, Comcast (CMCSA), Bank of America (BAC) along with also dozens of different companies.

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Despite the flurry of not bad news for workers, the jury is usually still out on just how much the tax law will benefit Main Street from the long run.

The slam-dunk winners coming from the tax law are Wall Street along with also Corporate America. Consider the party of which the corporate tax cut has set off from the stock market. The Dow is usually closing in on 26,000, barely a week after of which hit 25,000.

“This kind of is usually the greatest gift to Corporate America in decades,” said Ian Winer, head of equities at Wedbush Securities.

While Winer is usually skeptical about how much money will be used to reward workers, he’s confident about one thing: Most of the tax savings will be lavished on shareholders through stock buybacks along with also dividends.

“of which’s far better for investors than of which is usually for employees,” he said.

Owen Zidar, a University of Chicago professor who studies the effects of tax policy on firms along with also workers, agrees. “While workers will get some benefit, there are more substantial benefits to shareholders,” he said.

Workers are helped by a rising stock market through investment along with also retirement accounts. However, the market tends to help richer Americans more. Barely one third of families from the bottom 50% of earners own stocks either directly or indirectly, according to the Federal Reserve.

Related: Tax cuts risk overheating U.S. economy

of which’s true of which personal income taxes are going down for many Americans. The White House has said of which 0% of wage earners will likely take home more money as soon as February.

nevertheless of which could be tough for those gains to offset the huge savings companies are guaranteed. The tax cuts are “skewed toward businesses along with also high-income earners,” Beth Ann Bovino, S&P Global’s chief U.S. economist, wrote in a report.

of which’s also true of which dozens of companies are sharing their tax savings with workers. However, of which’s important to note of which well less than 10% of the S&P 500 have announced worker benefits like wage hikes, bonuses or sweetened 401(k) plans. At least so far.

The companies of which have announced are only sharing a tiny chunk of their windfall.

For instance, Wells Fargo (WFC) raised its minimum wage along with also announced plans to give more to charity. The total cost to the company will be just 5% of its estimated benefit coming from the corporate tax cut, according to investment bank KBW.

Even companies of which have rewarded workers more aggressively are sharing less than half their tax winnings with workers.

Walmart’s (WMT) minimum wage hike, bonuses along with also expanded parental leave policies will cost about $775 million This kind of year, according to Cowen & Co. of which’s about 35% to 40% of Walmart’s tax benefits, Cowen estimates.

“We aren’t close to having those raises along with also bonuses total the overall cut in tax liabilities,” Zidar said.

The market reaction backs of which up. Wall Street wouldn’t love the tax law if of which were the greatest gift to workers. of which could eat into record-high profit margins.

“Investors don’t mind little drippings given to people,” Winer said, “nevertheless if they saw meaningful wage gains, they could be concerned.”

2. Big banks report earnings: Citigroup (C), Bank of America, Goldman Sachs (GS GOLDMAN SACHS), U.S. Bank (USB) along with also Morgan Stanley (MS) are all set to announce fourth-quarter earnings next week. They’re likely to share some messy results.

In general, the completely new tax law is usually likely to be a boon for banks. Goldman research found of which of which could give the country’s seven largest banks a 14% boost in earnings, on average.

nevertheless most banks likely suffered a one-time hit from the last quarter because their deferred tax assets lost value when taxes were cut. JPMorgan, which reported earnings last week, said of which the tax law cost the company $2 billion from the fourth quarter.

Otherwise, JPMorgan posted great results. The bank’s profit fell just 1% along with also revenue grew 5%, both better than analysts expected. along with also CEO Jamie Dimon said of which he’s excited about the tax law, calling of which “a significant positive outcome for the country.” We’ll see next week how different banks fared, along with also whether their leaders feel the same way.

Related: JPMorgan’s Jamie Dimon gushes about tax cuts

3. What’s in store for retail in 2018? The annual National Retail Federation conference kicks off in completely new York City on Sunday. The three-day conference will feature high-profile speakers, including the chiefs of Walmart (WMT), JCPenney (JCP), Best Buy (BBY) along with also others.

of which’s a not bad time for retailers to meet. The NRF said last week of which the holiday shopping season was the best for retail in seven years. nevertheless 2017 overall was a brutal year for brick-along with also-mortar retailers, with record store closures along with also poor sales.

Retailers will also want to pay attention to January’s consumer sentiment survey, set to be released by the University of Michigan on Friday. Consumer confidence ticked down 2.6% coming from November to December.

Related: Retailers: Best holiday shopping season since ’10

4. Budget deadline looms: Last month, the Senate approved a short-term spending measure to avoid a government shutdown. of which measure is usually set to expire on Friday — along with also lawmakers think they may need another extension to keep the government open.

The main sticking point appears to be funding for the Deferred Action for Childhood Arrivals program, or DACA, which protects undocumented immigrants brought to the United States as children coming from deportation.

DACA’s fate has been an open question since Trump moved to rescind the program in September.

Afraid of losing valuable talent, business leaders are hoping the president will keep DACA alive. Last week, chief executives along with also different leaders coming from more than 100 companies urged lawmakers to make the program permanent.

Related: Lawmakers admit they need another stopgap budget bill to avoid a shutdown

5. Coming This kind of week:

Monday — Market closed for Martin Luther King Jr. Day

Tuesday — Citigroup along with also UnitedHealth earnings

Wednesday — Bank of America, Goldman Sachs, U.S. Bank earnings; Tiffany (TIF) reports holiday sales

Thursday — Morgan Stanley, IBM (IBM) earnings

Friday — January consumer sentiment

sy88pgw (completely new York) First published January 14, 2018: 8:43 AM ET

Don't be fooled. Wall Street, not Main Street, is usually the big tax winner

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