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Wall Street is ignoring the risk of corporate tax hikes

April 6, 2021. Summarized by summa-bot.

Compression ratio: 22.7%. 1 min read.

WASHINGTON, DC - MARCH 05: Treasury Secretary Janet Yellen listens during a meeting with President Joe Biden in the Roosevelt Room of the White House, March 5, 2021 in Washington, DC. Yellen has recently commented that bitcoin is an ???extremely inefficient??? way to conduct monetary transactions. (Photo by Al Drago-Pool/Getty Images)

President Joe Biden has made clear that if he gets his way, companies will soon be paying more taxes.

On Monday, Treasury Secretary Janet Yellen also called for a global minimum corporate tax to stop a "race to the bottom," wherein multinational firms book profits in countries with the most forgiving tax systems.

You'd expect such policy aims to spook stock investors, since higher taxes eat into corporate profits.

In years when both corporate and individual taxes were increased, stocks averaged returns of 2. 4%, according to Julian Emanuel, chief equity and derivates strategist at BTIG.

Jeffrey Sacks, head of investment strategy in Europe, the Middle East and Africa for Citi Private Bank and a member of the firm's Global Investment Committee, told me that investors haven't reacted strongly because of ambiguity about the details, including the timeline for when higher taxes could take effect.

Credit Suisse execs out as bank takes huge Archegos hit

The collapse last month of US hedge fund Archegos Capital cost Credit Suisse nearly $4. 7 billion and two of the bank's top executives their jobs.

The Swiss bank said Tuesday that it was likely to report a pretax loss of 900 million Swiss francs ($959 million) for the first quarter of this year after taking a charge of 4. 4 billion Swiss francs ($4. 7 billion) for the failure of Archegos.

Credit Suisse (CS) said that Brian Chin, its top investment banker, and chief risk officer Lara Warner would both be leaving the bank.

Investor insight: Bank stocks have soared this year thanks to expectations for a robust economic recovery.

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