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Technology Rotation Continues – Silver Linings Emerge
There is no doubt that investors are getting excited about a corporate tax cut that is on the horizon. You can see it just by looking at the sector performance; it is clear as a beautiful day in Montauk on the eastern end of Long Island, overlooking the Block Island Sound.
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Where is money flowing for the moment? From Technology into Industrials and Financials. Here are the effective tax rates of the “FANG’s” Facebook ($FB), Apple ($AAPL), Netflix ($NFLX) and Alphabet ($GOOGL). Notice how I omitted Amazon ($AMZN), more on that in a minute.
GOOGL Effective Tax Rate (TTM) data by YCharts
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It looks like Apple’s effective tax rate is the highest there at about 24 percent, how much do you think Apple benefit from a tax cut? Not much.
From the chart Amazon below we can see the tax rate they pay is pretty much all over the place, along with the operating and net income.
AMZN Effective Tax Rate (TTM) data by YCharts
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Industrials
Then there are the Industrials, like Boeing ($BA), 3M ($MMM), Union Pacific ($UNP), General Dynamics ($GD), FedEx ($FDX) which pay very high levels of Tax.
BA Effective Tax Rate (TTM) data by YCharts
Banks
The banks also pay high effective tax rates as well.
JPM Effective Tax Rate (TTM) data by YCharts
So money is merely rotating right now, eventually, when valuations get sorted out over the next couple of days and weeks, things should start evening out again.
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Technology Tested
If there is one piece of good news that came out of yesterday is that support levels have been tested and have held for now. We can see that the uptrend in the technology ETF ($XLK) held its uptrend.
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MasterCard
While stocks like Mastercard, which got slammed, are still within its trading channel.
Amazon
Amazon stayed above its support level too.
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Micron
While Micron found support at a gap which has now been filled circled below.
The rotation is still on, for now…
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Michael Kramer and the Clients of Mott Capital own shares of NFLX, MA, GOOGL
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
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Tags: #banks #technology #industrials #tax #reform #fedex #ups #citigroup #amazon #micron #mastercard
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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