Obama Tax Cut Move Could Send Stock ETFs Higher In July

Manufacturing in New York state fell to its lowest level since November. Consumer sentiment hit its lowest point in 6 months. And left-leaning publications are still eviscerating former president Bill Clinton for suggesting that America was already in a recession.

Actually, the 90s icon did more than just say what most people believe. He suggested that Congress and the White House agree to extend the Bush tax cuts for all Americans. And he suggested doing so to rev the economy back up in a hurry.

For the most part, Democrats, liberals and progressives alike expressed outrage. Why would Clinton publicly smash Obama's toes? Doesn't Clinton know that the plan is to raise certain taxes for families making more than $250,000 and install a millionaire tax to nab the Warren Buffetts of the world?

To be honest, it never occurred to me that Slick Willie might simply be prescribing the medicine that he felt would benefit his fellow countrymen. What did occur to me was the possibility that Mr. Clinton had just served up the savviest political maneuver since "It's the economy, stupid."

Clinton was not admonishing or excoriating President Obama; rather, the former leader was jumping on the grenade in June so that the current commander could propose the very same thing in July. That's right. President Obama will agree to extend tax cuts for all Americans in July… just like he did in November of 2010.

Ideologically speaking, President Obama does not want to keep tax rates where they are at. Politically, though, he understands the near-term benefit to businesses if there is tax certainty through… let's say… 2014.

Unemployment numbers would improve by September and October. Investment accounts would likely be higher as well. And the odds of an election victory would dramatically improve.

How does Obama explain what would appear to be flip-floppiness? Simple. He is reaching across the aisles to meet Republicans on common goals. He would be seen as compromising, and independents would view the move in a positive light.

Obviously, I am simply offering an educated guess on an unknowable future event. That said, every shred of economic data outside of declining gasoline prices is hampering Obama's chances on a daily basis. And if the June employment report due the first week in July is anywhere near as dismal as the months that preceded it… "change", "hope" and "forward" will give way to the one form of stimulus that Republicans can't turn down.

The S&P 500 SPDR Trust (SPY) is currently trading between its 50-day and 200-day moving average. If it breaks below the 200-day due to craziness in Europe, the likelihood of Obama agreeing to tax cuts before the election would be even greater. Have some cash on hand for the strong chance of July fireworks.

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Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.