The Powers That Be: Daily Wall Street’s Main Street Glitch
May 29, 2025
Bill Cohan, author of 'Dry Powder,' joins Leigh Ann Caldwell to explore the perplexing 'Main Street glitch' in Trump's tax policies and how it may create unforeseen tax hikes for businesses. They discuss Trump's increasing influence over market dynamics and how traders adapt to his shifting strategies. Additionally, Cohan critiques Bill Ackman's stance on Harvard’s endowment and its impact on institutional practices. This lively conversation reveals the intricate relationship between policy decisions and Wall Street's reactions, making economic complexities accessible.
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Main Street Glitch Overview
- The "Main Street glitch" in Trump's tax bill limits SALT deductions for partnerships to $10,000, unlike corporations which get a $40,000 limit.
- This creates a tax increase for partnerships like doctors' offices and hedge funds, penalizing their business structure.
Partnerships Face Tax Deduction Cap
- Partnerships like private equity firms and family-owned businesses face a deduction limit of $10,000 on state and local taxes under the bill.
- This creates broad opposition across many states and sectors, potentially forcing a Senate fix before the bill passes.
The Taco Trade Market Pattern
- Traders have exploited a pattern where Trump's tariff announcements are reversed, known as the "taco trade."
- This allows market participants to bet on reversals and profit, suggesting possible inside information influencing markets.
