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The Way To Profit From Suddenly Soaring Tax Collections Is Not How You Think

Withholding tax collections soared in the second half of November after a very weak start. Is the surge an anomaly, or is it a sign of a final explosive blowoff in the US economy? Maybe it’s both. We’ll need to watch the data in the next few weeks to see how quickly this surge dissipates. They always do.

Over the years that I have been tracking withholding tax collections I have noticed that just as JP Morgan said about stock prices, “tax collections will fluctuate.” There’s a regular cycle of increases and decreases that typically runs 2 to 4 months. The surge that we just had is much larger than normal, but typical time wise. The next pullback is due to start any day now.

Now, you may be wondering what these withholding taxes tell us about Friday’s employment report, coming soon to a TV screen or web browser near you. Unfortunately, there are too many conflicting signals in the data to draw conclusions about the November jobs report.

With apologies to Hall and Oates, it doesn’t really matter any way. You can rely on the Fed’s less money, you can rely on the less Fed’s money.

With that in mind here’s what we can learn from this data that is absolutely critical to the health of your portfolio.

The post The Way To Profit From Suddenly Soaring Tax Collections Is Not What You Think appeared first on Lee Adler’s Sure Money.