Mario Gabelli, CEO and chairman of Gamco Investors, discusses whether investors should expect a year-end surge for stocks.
Gabelli: Taxes Are A Wildcard Because Of Nancy Pelosi
No different to what I did before. I mean I had stocks that were like Textron Strong was 70 dropped to 55 and just go out with a basket I had a company in Charlotte call and pro a. Nice small cap stock dropped from 72 to 56 and so it was good pickings as we like. So you were a buyer on the pullback of the names that you like. Yeah we developed the intrinsic value what’s the business going to be worth over the next three or four years not the next three or four hours. And so when Mr. Market gives you that opportunity but you know we go back to the four things I like today you’ve got the Fed coming out. What’s the 10 year bond going to do and that has a significant impact on the multiples that you pay five years out. Secondly the tariffs are going to continue there I think you know Trump will Make Love To XI at some point in time and that will help the 2020 dynamics in the global economy which he needs to have for his effort that you know I’m down for that he’ll announce some.
Of that. And then you’ve got the guts to address them. Taxes are the wild card here because Nancy Pelosi is going to negotiate with Trump.
She’s got to try to get rid of some of the salt taxes or raise the level and she’ll probably try to get a higher corporate tax rate. I’ve got to bake that into our estimates instead of 21. But they won’t understand territorial they’ll never get to change that and they will not change carried interest because the lobbyists of these hedge funds private equity guys have got them captured. I don’t know how to do it but that’s the most absurd thing they won’t change and then basically technology is going to help us so you’re still positive. I think this is a terrific time and I think the head of the Ways and Means Committee that we talked about just a couple of minutes ago from that part of the world called the Red Sox territory home.
RITCHIN you know how’s he going to negotiate what he’s got to do. So there’s a lot of there’s going to be so much exciting times though. Look it started yesterday in this press conference right. Well you called. Hold on a second. Forgive me. Did you catch the president yesterday during that press conference.
I wish he were interested in other things to your point though about the you know another tax cut this time geared at the middle class and what the president might be willing to do as a tradeoff. He actually entertained the idea when he was asked by a reporter of an adjustment perhaps to the corporate rate raising the corporate rate by maybe 1 to 3 percent as part of a tradeoff to get a tax cut done so.
So let’s assume that we as a country we as a country take in three point seven trillion dollars. Corporate taxes are probably down to a couple of hundred billion. So if you raised that from 21 to 25. You know it’s. And I give because Nancy Pelosi. Congresswoman Pelosi is going to basically are you Madam Speaker is going not today yet but she’s going to basically try to help the soul states and California’s 14 percent. So at the margin you can’t duck. So basically that’s going to be one of the elements on the desk for a tradeoff. And property taxes if you and I would together we can on the higher rate. Yes we are. OK. Let’s turn point of view. Basically I’m I’m back. I’m not going to be like Dylon must say tying you with a certain price. We have spent basically the rate the rate is going to go try not to go off the rails.
Four minutes. Wait a little while longer. Wait a little bit.
Do mergers on the show. I wanted to ask you this all day when I said we were going to have you for the hour. I feel like the housing market is becoming the elephant in the room that people are analyzing other stocks in other sectors don’t want to talk about but we know that construction is the biggest multiplier in the economy. And we also know that the last recession was led by weakness in home prices. I think the housing market is still good. I wouldn’t call it weak but this morningD.R. Horton which is the biggest home builder in the country did not have.