U.S. Treasury Secretary Janet Yellen is expected to make a case for raising the corporate tax rate to help fund President Biden’s massive $2 trillion infrastructure spending. “We are proposing to fundamentally reform the corporate tax system,” she said. “That will help offset the cost of the proposed public investments.” In other news, gold hit a near four-month peak on Tuesday, while the dollar index fell to a near three-month low.

 

Fox Business
Yellen says corporate tax hike can pay for infrastructure

U.S. Treasury Secretary Janet Yellen on Tuesday will make the case for raising the corporate tax rate when she speaks to America’s business leaders today, in part, to help fund President Biden’s massive $2.2 trillion infrastructure spending included in the American Jobs Plan, Fox Business reports.

“We are proposing to fundamentally reform the corporate tax system. That will help offset the cost of the proposed public investments,” Yellen said in prepared remarks set to be delivered before the U.S. Chamber of Commerce’s Global Forum on U.S. Economic Recovery. “With corporate taxes at a historical low of one percent of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share: we propose simply to return the corporate tax toward historical norms.”

Biden is proposing to lift the corporate tax rate to 28% after former President Donald Trump slashed it to 21% early in his term – a move that was celebrated by the business community.

The move is aimed at increasing funding for improving not only roads and bridges but also “investments in an infrastructure for the future: broadband, research and development, public transportation, modernized schools, and a more expansive network of child-care providers,” Yellen detailed.

 

Reuters via CNBC/Arundhati Sarkar
Gold hits near 4-month high on weak dollar, inflation worries

Gold scaled a near four-month peak on Tuesday supported by a weaker U.S. dollar, while non-yielding bullion also attracted investors seeking an inflation hedge.

Spot gold was up 0.3% at $1,872.20 per ounce by 1228 GMT, after hitting its highest since Jan. 29 earlier in the session. U.S. gold futures were up 0.2% at $1,871.70.

“The narrative is clearly shifting towards inflation … but perhaps more critically, you have got the U.S. dollar weakness, which is probably the key and prime driver,” said independent analyst Ross Norman.

The dollar index fell to a near three-month low, making gold cheaper for other currency holders.

Analysts also noted that inflows into gold exchange-traded funds indicated that investors were buying gold to hedge against inflation worries.

Continue reading, here.

 

CNBC/Jeff Cox
Inflation, not Covid, is now the biggest ‘tail risk’ for markets, Bank of America survey says

Despite assurances from the Federal Reserve that the current spate of price increases is temporary, professional investors see inflation as the biggest threat to their portfolios, according to the closely watched Bank of America Global Fund Manager Survey.

A record 69% of respondents to the monthly reading see above-trend growth and inflation as the most likely scenario ahead. The survey history dates back to 1994.

What’s more, inflation is seen by 35% as the biggest “tail risk,” or unlikely event that could cause substantial damage.

Only a few months ago, the Covid-19 pandemic was seen as the biggest tail risk – now just 9% of managers view it that way, ranking it behind a Fed-related “taper tantrum” in the bond market (27%) and an asset bubble (15%).

In all, a net 83% of investors see inflation higher in the next 12 months. While that’s a 10 percentage point decline from a month ago, it is “still extremely high,” said Michael Hartnett, Bank of America’s chief investment strategist.

The inflation views come amid signs of rapidly escalating price increases across a variety of sectors.

Read the full story, here.

 

 

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