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Since 1945, post-tax day equity returns strongest when "big tax hit" involved = strengthens case for near-term upside

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2022 is a "pie in the face" kind of year

If someone asked me to describe 2022 so far, it is a "pie in the face" year. The world is facing several key turning points (inflation, supply chains, monetary policy, war) and these combined effects are impacting equities, bonds and commodities in a way not seen in the past 30 years. While our base case for 1H2022 was "treacherous," the realized treachery is far greater.

  • but as painful as equities have been since the start of 2022
  • our base case is that 2/24/2022 is the "low" for 1H2022
  • and while stocks won't go straight up, we think risk/reward still remains attractive 6M to 12M out
Bert And Ernie Pie In The Face GIF - Bert And Ernie Bert Ernie - Discover &  Share GIFs
Source: Sesame Street

Capital gains taxes owed on 4/18/2022 estimated largest in history >$800 billion (for tax year 2021)

Equities have fallen in a straight line since late March (13 trading sessions) and the decline continued into April 18th. We have written about the impact from IRS taxpayer deadlines for this effect:

we highlighted stocks tend to do worse into tax day when prior year (tax year) gains strongthis is due to cash raised to pay for taxeswe highlighted that we estimate 2021 capital gains taxes owed likely >$800 billion, a recorda...

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