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Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.

Do you remember our Cycle Risk callout for Buybacks to slow in 2020? We made that risk management call in Q4 of 2019 (pre-virus, when SPX EPS slowed to -1.1% y/y). It’s a Cycle Topic we quantify in slides 86-88 in our latest Q3 Macro Themes deck:

  1. During Pump’s Tax Reform, Buybacks were THE tailwind to SPX Earnings growth while Revenues were slowing
  2. Despite the epic surge in Debt Issuance in 2020, guess what hasn’t surged? A: Buybacks
  3. What would a repeal of Tax Reform mean under Biden? See today’s Chart of The Day (slide 88)

That last point isn’t a political opinion, it’s a risk management point. Even if you don’t “believe in the polls”, the rate of change of the polls just moved, fast, here in June. Is your process going to dynamically or dogmatically re-orient for that?

CHART OF THE DAY: The Future Of Tax Reform? - COD Tax Re reform