The following, from an advisor to the President, and the CEO of the Wall Street Firm presently doing the Fed's bidding in asset markets, while spot on, is interesting, considering the source.
On a client call this week Larry Fink laid out the following:
From Bloomberg piece BlackRock's Fink Delivers Grim Outlook With Tax Hikes for Corporate America:
"Fink said on the call with clients of a wealth advisory firm that bankers have told him they expect a cascade of bankruptcies to hit the American economy, and he wondered if the Fed needed to do more to provide support, according to a person with knowledge of the remarks.
Even as the U.S. is plunged into deepening economic gloom, it will have to raise taxes to pay for emergency efforts to rescue sectors grappling with a difficult recovery, he warned on the call.
Among his predictions: lifting the 21% corporate rate signed into law as part of 2017’s tax overhaul to about 28% or 29% next year, according to the person. Fink also said he sees tax rates for individuals going up.
Raising taxes would water down the biggest legislative achievement of Trump’s time in office, when he and a Republican-controlled Congress drove through the most significant changes to the tax code in decades.
Lower corporate rates juiced profits and showered cash on shareholders through increased dividends and stock buybacks. Now, at a time when many taxpayers are less able to bear the burden of higher taxes, the government may be forced to extract a larger share of companies’ and individuals’ income.
The spread of the coronavirus, and measures taken to mitigate it, slammed the brakes on the economy. While Trump pushes to reopen commerce and his officials predict a rapid rebound, public health experts and some economists are skeptical the crisis will soon be over.
Politicians, business leaders and economists are beginning to confront the risks of a limited federal response that might speed up the demise of smaller companies and wreck state and municipal finances that pay for schools, law enforcement and infrastructure.
That won’t be the only strain on companies. Many may have to operate with only about half their staff in the office for more than a year, according to Fink. Across white-collar industries, millions are working remotely from home. It would be hard to see a complete return without mass availability of rapid testing, he said.
There’s a risk that the U.S. outbreak will be severe enough to leave a long-lasting impact on the American psyche, undermining Americans’ willingness to take public transport or fly, according to Fink. He said he’s not aware of any of his CEO peers planning international travel this year.
Underscoring the point, this week home-sharing leader Airbnb Inc. and ride-hailing firm Uber Technologies Inc. announced plans for mass layoffs as they wrestle with falling demand and dimmed prospects for the rest of the year.
Many of the U.S.’s 30 million small businesses have struggled to get the relief they need. If the crisis continues, about 25% of those companies could close permanently before year-end, according to an April report released by Main Street America, a network comprising approximately 300,000 small businesses.
Restaurants that typically operate with thin margins will struggle to survive as they plot out ways to lure back customers with social-distancing measures in place, Fink said.
Fink also said he was concerned the worsening economic duress could further fan the flames of nationalism. The devastating impact from the coronavirus could make it a bigger threat to the global order, he said."While I suspect the political will to raise taxes (at least for individuals) next year will be nil, the rest of Fink's warning is, again, spot on, and is nothing the stock market has remotely discounted to this point...
If Fink indeed thought that he was speaking to a private audience, and that it would remain that way, look for him to walk back much of the above over the coming days... Which wouldn't change the real-world narrative one iota...