Weekly Market Update

WHITE HOUSE RELEASES AMBITIOUS TAX PLAN

Thursday, April 27, 2017

White House officials released the outline of President Trump's tax plan on Wednesday. The plan proposes to cut the corporate tax rate from 35% to 15% and to exclude income earned overseas. For individuals, the tax brackets would be simplified, and the top bracket may be reduced from 39.6% to 35%. At the same time, the plan may end state and local tax deductions from federal tax returns. Details on funding the plan were not provided. Democrats demonstrated opposition to the plan, leaving doubts as to whether the plan can pass Congress. The bond market's reaction reflected this uncertainty, with the 10-year treasury yield decreasing slightly on Wednesday afternoon.

In Other News

  • Many participated in the March for Science this past weekend. While the stated goal was to influence White House policies on scientific funding, the event also sought to educate people about the importance of science.
  • Purdue University plans to buy the for-profit Kaplan University and turn it into a public institution. The 30-year deal will allow Kaplan to run the new school without state funding.
  • Audits found that the University of California's President, Janet Napolitano, may have over-reported budgets while seeking extra funding. Doing so created millions of dollars in hidden funds, some of which were spent on abnormally high employee salaries and benefits. Ms. Napolitano responded that the audit report was not accurate.
  • Following the suspension of the IRS's Data Retrieval Tool (DRT), Education Secretary, Betsy DeVos, proposed ways to help students and families complete Fafsa applications by providing alternative ways to verify tax returns. Other solutions to alleviate the problem are under consideration.
  • According to two SEC orders, Lawson Financial Corporation (LFC) and its CEO, Robert Lawson, violated laws for failing to report fraud in an issuer's previous continuing disclosure undertakings (CDU). LFC's investment banker, John Lynch, was fined by the SEC for related violations. These two cases are the first to involve misleading previous CDU information in official statements following the SEC's Municipalities Continuing Disclosure Cooperation initiative.
  • Consumer confidence is down, but both home sales and prices are high, indicating relatively solid economic conditions.
  • Many colleges and universities are becoming more career oriented, driven by student concerns about finding jobs and paying back student loans. As a result, liberal arts degrees are becoming less popular, forcing many colleges to shift program focus to technical skills.

Rating Agency Update

  • Moody's assigned A2 to Hofstra University's Series 2017 Bonds. The outlook is stable.
  • Moody's assigned Aa2 to Mississippi Institutions of Higher Learning's Series 2017 Revenue Bonds. The outlook is stable.
  • Moody's assigned A2 to Susquehanna University's Series 2017 Revenue Bonds. The outlook is stable.
  • Moody's affirmed its Aa2 rating for University of Hawaii. The outlook was revised to stable from negative.
  • S&P raised Carnegie Mellon University's bond ratings to AA from AA-. S&P also raised Carnegie Mellon University's Series 2008A Variable-Rate Demand Bonds to AA/A-1+ from AA-/A-1+. The outlook is stable.
  • S&P assigned AA+/A-1+ to the University of Pittsburgh's Series 2017C Taxable Refunding Bonds. The outlook is stable.
  • S&P affirmed its AA- rating for the University of Maine System's various series of outstanding revenue debt. The outlook was revised to stable from negative.
  • S&P affirmed its BBB rating for Benedictine University's existing revenue debt. The outlook was revised to stable from negative.