Latest news with #OBBBA
CNBC
6 hours ago
- Business
- CNBC
Trump-backed 'big beautiful bill' unleashes billions for Big Tech. How four of our megacaps benefit
The "big beautiful bill" — championed by President Donald Trump and signed on Independence Day — is shaping up to be a windfall for Big Tech. The measure — officially called the "One Big Beautiful Bill Act," or OBBBA for short — restores three tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) from Trump's first administration. They are set to boost free cash flow (FCF) for megacap tech firms that are pouring billions and billions of dollars into building artificial intelligence data centers and specialized AI infrastructure. The OBBBA brings back (1) expensing for domestic research and development, (2) 100% bonus depreciation for qualified capital expenditures, and (3) a more flexible interest deductibility limit. These provisions don't lower statutory tax rates. But, as Morgan Stanley noted, they will accelerate deductions, which could potentially drive "effective cash tax rates back toward historical lows." That, according to the analysts, could "unlock billions of free cash flow" this year for companies, including Club names Amazon , Apple , Meta Platforms , and Microsoft , which all report earnings this week. While the OBBBA provisions are valuable for the entire business community, large tech firms, in particular, benefit, according to Morgan Stanley, due to "massive R & D (research and development) and infrastructure investment in areas like AI, compute, data centers, and cloud platforms." The analysts at Morgan Stanley estimated that tech companies' FCF — or cash a company generates from its operations after accounting for necessary investments to maintain or expand the business — "could inflect this quarter," as companies adjust to the new legislation. That extra liquidity will give them "more flexibility to continue to deepen their competitive advantage in Generative AI and deliver more free cash flow to investors," they wrote in a recent note to clients. A key feature of OBBBA's provisions is that they're permanent, which establishes greater policy certainty, according to Travis Riley, a principal tax firm Baker Tilly. "That makes it great for planning," he stressed, providing a more stable environment for where mega-caps' AI-driven capital investments can be allocated. This stability drastically differs from the temporary provisions under the previous TCJA that were set to eventually expire. "Everyone in the tax community knew this was horrible tax policy and that it was going away, but no one was sure about the timing and mechanics of it," explained Riley, who leads Baker Tilly's research and development tax credit services. Before the enactment of the OBBBA, the law required businesses to capitalize and take domestic R & D costs over five years instead of fully deducting those expenses in the year they were incurred. "Before this bill, we were probably the only first-world country that penalized companies to do research and development, which is interesting in the sense that the U.S. is one of the leading innovators," said Kunaal Patel, principal of tax services at Baker Tilly. Companies can now take that full R & D expense on those deductions, meaning, their overall cash liability "should decrease dramatically in 2025 and going forward," he added. Under TCJA's rules on bonus depreciation, companies were temporarily permitted to deduct 100% of qualifying capital expenditures upfront. But, that went down by 20% each year starting in 2023, resulting in a 40% depreciation level in 2025. As Morgan Stanley puts it, these OBBBA changes allow businesses to "now reliably factor full bonus depreciation into long-term capital planning and investment decisions." These two provisions together – R & D and bonus depreciation – "significantly lower current cash tax obligations by accelerating the timing of cash deductions," analysts wrote. TCJA also placed new limits on how much interest businesses could deduct. Initially, businesses could deduct interest expenses up to 30% on EBITDA (earnings before interest, taxes, depreciation, and amortization. Beginning in 2022, that limit tightened to 30% of EBIT, excluding depreciation and amortization. The OBBBA went back to 30% on EBITDA. According to the Tax Foundation , a Washington think tank, this change provides "tax relief for firms dealing with debt-financed investment in a higher interest rate environment." To be sure, while the OBBBA should boost FCF, investors should continue to prioritize the companies' fundamental drivers of cash flow generation, especially since the timing of these tax changes won't impact their generally accepted accounting principles (GAAP) earnings-per-share. In other words, these tech firms aren't fundamentally different companies just because they're getting billions in bonus free cash flow from these new tax treatments. Rather, it's a "timing benefit from the pull forward of future cash tax savings rather than a structural change in free cash flow generation," according to Morgan Stanley. This means these companies will recognize more cash flows upfront and less later. "The new bill should promote a lot of domestic investment by big tech and provide a positive trickle-down effect to the rest of the economy," Jeff Marks, director of portfolio analysis for the Investing Club. "Although, some of the boost to free cash flow is accounting-based, it should support the multibillion-dollar share repurchase programs of these large companies." Here's a look at how much and in what ways Amazon, Apple, Meta, and Microsoft (in alphabetical order) stand to benefit from the three major tax provisions of the OBBBA. AMZN YTD mountain Amazon YTD Amazon stands to be the "largest beneficiary" thanks to its massive capital spending on data centers, logistics infrastructure, and research and development, particularly in cloud computing. A Morgan Stanley analysis estimates that Amazon will see a $15 billion lift to free cash flow by 2026, with the benefit still reaching $11 billion in 2028. While some of this may be returned to shareholders, analysts say the real impact is in Amazon's ability to double down on next-generation investments. That includes everything from same-day delivery and robotics in its retail business, to chip development and infrastructure expansion in its Amazon Web Services (AWS) cloud unit. The OBBBA would also give Amazon room to scale its partnership with AI firms like Anthropic. "This is more likely to give Amazon the flexibility to continue investing in its moats, especially in areas like generative AI, logistics and grocery," analysts said. AAPL YTD mountain Apple YTD Apple is expected to get a $20 billion boost to FCF over the next four years, according to Morgan Stanley. That's equal to an average annual free cash flow tailwind of 4% — with the biggest benefit of about $12 billion coming in 2026, the analysts noted. While meaningful, this extra cash isn't likely to change Apple's steady capital return strategy, which includes roughly $25 billion in quarterly stock buybacks and modest dividend increases. Still, Morgan Stanley sees room for Apple to invest "on the margin," particularly in areas like AI infrastructure, iPhone manufacturing shifts, and new technology like health or robotics. The analysts said the bill gives Apple "more cash optionality," but expects most of its plans to stay the same. META YTD mountain Meta Platforms YTD Meta, too, would see a significant lift from the bill, with Morgan Stanley estimating an $8 billion to $10 billion increase in free cash flow through 2028. That's a 22% boost to the company's expected 2026 free cash flow — a strong figure for a company spending heavily in AI infrastructure. Analysts believe Meta is more likely to reinvest a good chunk of that tax benefit into its infrastructure buildout to support massive AI computing clusters. MSFT YTD mountain Microsoft YTD The OBBBA could boost Microsoft's free cash flow by $10 billion over the next year — a 12% jump from previous forecasts, according to Morgan Stanley. However, the analysts don't expect this to change Microsoft's game plan. With more than $80 billion already on its balance sheet and another $130 billion to $150 billion in annual operating cash flow expected, the company "is not cash constrained," they said. This suggests any extra funds might be used for opportunistic acquisitions under the current administration. (Jim Cramer's Charitable Trust is long AMZN, META, MSFT, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Forbes
7 hours ago
- Business
- Forbes
Quirk Of ‘Big Beautiful Bill' Makes 45.5% Actual Top income-Tax Rate
A phaseout for high earners in the newly increased state and local tax (SALT) deduction essentially ... More introduces a new top tax rate. One of the defining features of the 'One Big Beautiful Bill' Act (OBBBA) is its significant increase in the limit on the state and local tax (SALT) deduction from $10,000 to $40,000. This high-profile tax benefit for reducing taxable income is available for those who itemize deductions on their federal tax returns instead of using the standard deduction. However, the higher cap on the SALT deduction comes with a catch: a phaseout for those with yearly income exceeding $500,000. While the income-tax rates for most of those taxpayers are 35% and 37% (the top two brackets), this phaseout of the SALT deduction can push your actual marginal tax rate to almost 46%. This significant jump has prompted financial advisors to suggest various strategies in response—including simply working less! This article explains the tax oddity around the increased SALT deduction and the approaches to it that advisors are recommending. SALT Deduction Review State and local tax (SALT) is an itemized deduction on Schedule A of your Form 1040 tax return. SALT includes property tax and state income tax. In a state without an income tax, you can deduct sales tax. You go with itemized deductions to reduce your taxable income when your itemized total (including mortgage interest and charitable donations) is greater than the standard deduction. Under the OBBBA, in 2025 the standard deduction is $15,750 for single filers and $31,500 for joint filers. In 2018, the Tax Cuts & Jobs Act (TCJA) imposed a limit of $10,000 on the total SALT deduction available to itemize, no matter how much more SALT you actually paid. This was unpopular, especially in high-tax states such as California and New York. To get enough votes from Republicans to pass in the House of Representatives, the OBBBA needed to include a meaningful increase in the cap on the SALT deduction. Accordingly, the OBBBA dramatically hiked the cap on SALT deductions to $40,000 per year from 2025 through 2029, with a 1% increase each year. The deduction limit is scheduled to return to $10,000 in 2030—expect to hear a lot about the 'sunset' of this provision as that time approaches. Alert: If you pay estimated taxes and are eligible for the higher SALT deduction, check with a tax professional (e.g. CPA, Enrolled Agent, tax lawyer) about any needed adjustments for the remaining quarterly payments of 2025. This is one tax-law change I personally benefit from. I live in a town in Massachusetts with high property taxes that pay for its excellent public schools and local government services. Additionally, the state income-tax rate is 5%. An extra 4% state tax applies to income of $1 million or more (not my worry). The higher limit on the SALT deduction also makes up for my personal frustration with the OBBBA for permanently ending the tax-free employer reimbursement of up to $20 per month for bike commuting. That annoyed me because I bike to work year-round, including in the harsh New England winter, as part of my training for the Pan Massachusetts Challenge (PMC), a yearly fundraising event for the Dana-Farber Cancer Institute. Higher SALT Cap Phases Down As I explain in my recent article 'Big Beautiful Bill' Affects Tax Planning For Stock Options And RSUs, phaseouts are the laser gun of the tax code. They vaporize taxpayer-favorable provisions to meet federal budget rules, while also adding complexity to the tax code. The OBBBA imposes a phaseout—called a 'phasedown' in the tax law—on the new additional SALT deduction based on your income: from $40,000 down to the base $10,000 SALT deduction. For taxpayers with modified adjusted gross income (MAGI) above $500,000, the additional deduction phases out at 30% of every dollar over that threshold and completely phases out at $600,000 of MAGI. At that point, you are left with just the underlying $10,000 SALT deduction that is not part of the phasedown. Because it takes away potential deductions from your taxable income, the phaseout increases your true marginal tax rate—how much in taxes you are really paying for each additional dollar in income. Holistiplan, which provides a tax-planning platform with tools for advisors, calculated this tax increase for me. The 2025 numbers below are for both single taxpayers and joint filers, as the maximum SALT deduction and the income point where the phasedown starts are the same for both (a clear example of the 'marriage penalty' in the tax code). Table provided by Holistiplan for article Quirk Of 'Big Beautiful Bill' Makes 45.5% ... More Actual Top Tax Rate For High-Income Taxpayers 'The phasedown of the SALT deduction introduces a new 'marginal' bracket for those impacted,' observes Ben Birken, Vice President for Subscriber Support & Adoption at Holistiplan. 'In fact, the tax code is packed with these non-published marginal brackets for things like the phaseout of the child tax credit, taxation of Social Security, when capital gains shift from being taxed at 0% to 15%, and the phaseout of the Qualified Business Income (QBI) deduction.' In general, comments Birken, 'you could say the tax code is a vast ocean littered with unseen tax torpedoes, of which the OBBBA adds even more.' What Advisors Are Telling Clients Financial and tax advisors are viewing the span of $500,000 to $600,000 in adjusted gross income (AGI), and the income range approaching it, as critical areas to watch for their clients. The issue was concisely expressed by Jeff Levine, a tax advisor and the Chief Planning Officer with Focus Partners in St. Louis, Missouri, during a recent webinar on the OBBBA: 'As you go from $500,000 of AGI to $600,000 of AGI, if you were getting your full $40,000 deduction for SALT taxes and you go down to $10,000, you're effectively paying taxes on not $100,000 more of income but on $130,000 more: the $100,000 of income you actually received plus the $30,000 of deductions that you lost.' When you add in any state and local taxes to that income, he pointed out, you may end up keeping just half of the money you made. Advisors recommend many planning ideas to try to hold your income below the phaseout zone. These include maximizing contributions to qualified retirement plans, such as a 401(k) or IRA; putting salary or bonuses into any nonqualified deferred compensation plan that's available; exploring eligibility for other retirement or pension plans that defer income; and making bigger charitable donations (directly or to a DAF). Plus, where possible, you want to evaluate whether to avoid triggering more income, such as with Roth IRA conversions, nonqualified stock option exercises, and asset sales. Levine urged advisors that 'if your client is at $600,000 of income, you basically want to do anything you can, perhaps, to lower their AGI, because it's that meaningful.' He even (only half-jokingly) suggested to advisors that they may turn to some of their more workaholic clients and say: 'You're working your tail off, running around doing all your work, working all this overtime, or trying to max out your bonuses. Why don't you just take it a little bit easier this year? Instead of making $600,000 you'll make $500,000, but you'll get back all this time in your life, and it's only net-net going to cost you $50,000 after the taxes.'
Forbes
9 hours ago
- Business
- Forbes
Real Estate Set To Soar After Trump's One Big Beautiful Bill
WASHINGTON, DC - JULY 04: U.S. President Donald Trump, joined by Republican lawmakers, signs the ... More One, Big Beautiful Bill Act into law during an Independence Day military family picnic on the South Lawn of the White House on July 04, 2025 in Washington, DC. After weeks of negotiations with Republican holdouts Congress passed the One, Big Beautiful Bill Act into law, President Trump's signature tax and spending bill. The bill makes permanent President Donald Trump's 2017 tax cuts, increase spending on defense and immigration enforcement and temporarily cut taxes on tips, while cutting funding for Medicaid, food assistance and other social safety net programs. (Photo by) The One Big Beautiful Bill Act, signed into law by President Donald Trump on July 4, 2025, is not without its critics. From concerns about ballooning deficits to controversial cuts to Medicaid, many see the legislation as a step backward. However, for those in the commercial real estate industry, the bill is a potential game-changer. New tax provisions offer clarity and long-term stability for developers and investors, setting the stage for what could be the next major boom in the sector. While the provisions of the OBBBA will have significant implications for the entire commercial real estate market, two sectors stand to benefit particularly: low-income multifamily housing and industrial development. A Permanent Boost for Affordable Housing There is a growing housing shortage in the United States, especially in the low-income end of the market. The lack of affordable units drives homelessness, deepens poverty, strains public services, and weakens the economy by limiting workforce mobility and long-term social stability. The OBBBA specifically targets this crisis with the new incentives and provisions to jumpstart development. According to DLP Capital, a private real estate investment company specializing in affordable housing development, the gap between qualified income and actual income has grown to 54.6% from -3.7% since 2021. DLP believes the new incentives will have a significant impact on the market. "The OBBBA may be the most pro-housing CRE legislation in a generation," says DLP's head of growth, Bo Parfet. The OBBBA includes a significant boost to the Low-Income Housing Tax Credit program, which is the nation's primary tool for creating affordable housing. Before the OBBBA, it operated with annual allocations that were subject to congressional approval and extension. While effective, this approach created uncertainty for long-term project planning and limited states' ability to address the housing shortage with consistent, predictable funding. The OBBBA provides a permanent 12% increase in the annual amount of 9% LIHTC allocations. Another provision created under the OBBBA is the Fast-Track Permitting Fund, which allows developers to pay a fee to expedite federal environmental reviews under the National Environmental Policy Act. This fund is particularly beneficial for low-income housing projects that rely on federal funding or tax-exempt bonds, as it helps reduce delays that often derail or inflate the development costs. By streamlining the approval process, the fund enables affordable housing projects to meet financing deadlines more easily, improve predictability, and bring much-needed units to market more quickly. The hope is that the Fast-Track Permitting Fund will put political and market pressure on states and cities to follow suit, further reducing bottlenecks. The lengthy permitting process is often a deal-killer for developers, and reducing the timeline to construction should improve investment returns. "Multifamily—especially workforce housing—is the clear winner. More deals will move forward, faster," says Parfet. In addition to adjustments to the Low-Income Housing Tax Credit program and the introduction of the Fast-Track Permitting Fund, changes to opportunity zones are also expected to fuel growth in affordable housing. The Qualified Opportunity Zone program, designed to incentivize long-term investments in low-income communities, was created with a sunset date of December 31, 2026, for capital gain deferral. The OBBBA makes the deferral feature permanent. It also introduces new 10-year designation periods for new zones, starting in 2027, and includes provisions for rural opportunity zones with enhanced benefits. The introduction of rural opportunity zones should help direct capital into underserved rural areas, potentially spurring new industrial and multifamily developments in these regions. Investors who may have been hesitant due to the previous program's limited lifespan will likely re-evaluate Qualified Opportunity Zone projects, leading to new capital flowing into underserved communities and regions. Ben Reinberg, CEO of real estate investment firm Alliance Consolidated Group of Companies, believes the new legislation will re-energize OZ investments. "For long-term investors looking to reduce exposure and amplify yield, OZs just became very relevant again," he says. Massive Incentives For Domestic Manufacturing The Trump administration has made domestic manufacturing a central focus, using tariffs to try to shift supply chains and incentivize production at home. The OBBBA complements that strategy, combining new tax incentives with the renewal of other programs to accelerate industrial development and attract capital back to U.S. soil. The biggest incentive in the bill targets Qualified Production Property. Before the OBBBA, nonresidential buildings, such as factories, were typically depreciated over a lengthy 39-year period. While equipment and other tangible personal property qualified for bonus depreciation, the buildings themselves did not. The OBBBA introduces a new, temporary provision that allows for a 100% immediate deduction of the cost of QPP. To qualify, construction must be completed before January 1, 2029, and the property must be placed in service before January 1, 2031. QPP excludes offices, administrative areas, lodging, and parking within the building. The ability to immediately deduct the cost of eligible manufacturing facilities provides a powerful tax incentive. The QPP provision should stimulate the construction of new factories, assembly plants, and processing facilities across the U.S., encouraging companies to reshore production from overseas or nearshore from other countries to the U.S. The growth of manufacturing facilities should lead to increased demand for other logistics assets such as distribution centers and warehousing. "The opportunity lies in overlooked industrial corridors, characterized by land availability, low regulation, and favorable tax structures," Reinberg notes. "Industrial CRE is the sleeping giant. This bill just woke it up." Permanent 100% bonus depreciation, which allowed businesses to deduct the full cost of eligible qualified property immediately, was also introduced in the OBBBA. The previous law had 100% bonus depreciation phasing down. For property placed in service in 2025, the rate was set at 40%, declining further in subsequent years. The phase-down created urgency for capital expenditures to take advantage of the higher deduction rates. Another positive provision for commercial real estate is the change to the deductibility of interest costs. The previous law restricted the deduction of business interest expense to 30% of adjusted taxable income and excluded the add-back of depreciation and amortization from the calculation, lowering the amount of deductible interest for capital-intensive businesses. The OBBBA permanently amends the calculation for the business interest expense limitation to include depreciation and amortization. By including these expenses in the determination of adjustable taxable income, real estate businesses will generally be able to deduct a larger portion of their business interest expense, increasing cash flow and improving the overall profitability of debt-financed projects. In a higher-interest-rate environment, this change makes borrowing more attractive. The Revival of Commercial Real Estate The OBBBA is undoubtedly positive for the commercial real estate market. By enhancing incentives such as 100% bonus depreciation, LIHTC, fast-track permitting, and opportunity zones, the OBBBA can provide clarity and predictability to investors and developers, ultimately helping to address the affordable housing problem. Meanwhile, the new Qualified Production Property deduction is expected to reinvigorate the industrial market and promote domestic manufacturing. The OBBBA is indeed beautiful, especially for commercial property.
Yahoo
11 hours ago
- Business
- Yahoo
Two-income retired couples may lose $18,100 annually in Social Security in 2033
A dual-earning couple retiring at the start of 2033 can expect an average $18,100 lower annual Social Security benefit than if they retired now, according to a new analysis from the Committee for a Responsible Federal Budget. The 24% drop is expected to come just after Social Security's Old-Age and Survivors Insurance (OASI) Trust Fund is depleted. OASI holds money collected from payroll taxes to help fund Social Security. That fund is expected to be depleted by late 2032 as the number of retired people outpaces the number of workers. Once OASI's depleted, Social Security benefits will no longer be paid at the full rate. Instead, benefits will be cut, only payable by the amount of money coming in. Even worse, "the cuts would grow over time as scheduled benefits continue to outpace dedicated revenues," the nonprofit CRFB said in its analysis. By 2099, the size of the required benefit cut would grow to well over 30%, it said. Here's how cuts could affect Americans The $18,100 annual cut is an average for a two-income couple. Depending on a couple's age, marital status, and work history, the actual size of the benefit cut would vary. Here are some examples of how Americans could be affected, in nominal or non-inflation adjusted terms, CRFB said: A typical single-earner couple would face a $13,600 cut, while a dual-earner low-income couple would face an $11,000 annual cut. High-income couples could see a cut of closer to $24,000. Although the absolute size of the cut would be smaller for a typical low-income couple than for a high-income couple, it would represent a larger share of their income and their past earnings. How many Americans could be affected? In June, nearly 67 million Americans received Social Security, according to the Social Security Administration. Social Security is deemed important by 96% of Americans in 2025, with little difference among age groups and political party affiliation, an AARP survey of 3,599 adults ages 18 and older taken last month showed. AARP is a nonprofit advocating for older Americans. Nearly two in three retired Americans say they rely substantially on Social Security, while another 21% say they rely on it somewhat, AARP said. CRFB vs Social Security and Medicare Trustees The CRFB's estimates of a 24% cut in seven years is more dire than the 23% drop in eight years provided by the Social Security and Medicare Trustees report in June. That's because CRFB accounts for the impact from the One Big Beautiful Bill Act (OBBA) signed into law over the Fourth of July, the think tank said. "The tax rate cuts and increase in the senior standard deduction from the recently enacted OBBBA would reduce Social Security's revenue from the income taxation of benefits, increasing the required cut by about a percentage point upon insolvency," CRFB said. "If the expanded senior standard deduction and other temporary measures of OBBBA are made permanent, the benefit cut would grow larger." The OBBBA's $6,000 extra senior deduction is slated for 2025 through 2028. What can government do to keep 100% benefits flowing? Congress will have to increase revenue coming into the program by possibly raising payroll taxes, reducing overall spending on benefits maybe by raising the full retirement age, or some combination of the two, AARP suggested. Also, eliminating the maximum income that's taxable for payroll tax and reducing the benefits paid on higher earnings are also among steps Congress could take to save money, the CRFB said. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: Social Security checks in 2033 may be 24% smaller Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13 hours ago
- Business
- Yahoo
‘Not just a cyclical recovery, but a boom.' BofA says a ‘key tail risk' is that the Trump economy will actually start to take off
In a market landscape still fixated on fears of stagflation and modest recoveries, Bank of America is sounding a contrarian—and decidedly bullish—note. According to new note from BofA Research analysts, the next phase for the U.S. economy and equities might not be a routine recovery, but an outright boom. 'Today a confluence of factors argue that the key tail risk that may not be priced in is not just a cyclical recovery, but a boom,' they said. 5 reasons for a boom BofA analysts cited five pillars supporting this more bullish case. First is political will, arguing that with U.S. midterm elections a few quarters away, policymakers have strong incentive for near-term, pro-growth initiatives. Second is Washington's 'One Big Beautiful Bill Act' (OBBBA) targeting domestic manufacturing. Third is the massive overseas jolt gathering, with Germany recently enacting the largest stimulus package in EU history, while global reflationary forces are building elsewhere. Fourth, BofA sees a broad expansion of capital expenditures, with hyperscalers such as Amazon, Meta, Microsoft, and Alphabet set for nearly $700 billion in capital expenditures between 2025 and 2026. In addition, more non-U.S. companies plan to expand manufacturing capacity in the U.S., while municipalities are focused on updating aging infrastructure. Fifth, BofA cited its proprietary 'Regime Indicator,' a blend of macro signals including corporate revisions to earnings per share, GDP forecasts, and other emerging signals. It's on the verge of flipping from a 'Downturn' to a 'Recovery'—a change that historically presages a rally in value stocks. The dominant narrative in this indicator remains conservative, according to the BofA team, led by Savita Subramanian. In June, 70% of fund managers still predicted stagflation, with only 10% foreseeing a 'boom' of above-trend growth and inflation. Yet, BofA argues, the catalyst for an upside breakout is real and imminent. If the Regime Indicator does indeed flip to 'Recovery' in early August, historical precedent suggests a rapid rotation is likely. So how healthy are these five factors actually looking? Will there be enough spending? Top economies have already pledged massive stimulus. In March, China unveiled plans to issue 1.3 trillion yuan ($179 billion) in special treasury bonds this year, plus 4.4 trillion yuan of local government special-purpose bonds. Meanwhile, much of the EU's stimulus still flowing from the earlier NextGenerationEU package is worth up to €806.9 billion (about $880 billion) through 2026. Major European economies have supplemented this with additional investments and, in some cases, targeted fiscal expansion. Japan, South Korea, Canada, and Australia have adopted smaller-scale but still significant fiscal measures in 2025 to address sector-specific slowdowns, energy security, and household purchasing power. Most are focusing on targeted transfers, green investments, and industrial support. Meanwhile, American companies have announced billions in new U.S. manufacturing, infrastructure, and technology investments since Trump took office, but these initiatives were announced before passage of the OBBBA. Many investments are phased and slated for completion over the next decade, and it's unclear how much can come online soon enough to play a role in the boom that BofA Research is projecting. Some of them, such as OpenAI's $500 billion Stargate project, are reportedly struggling to raise funding to match the big numbers initially announced. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error al recuperar los datos Inicia sesión para acceder a tu cartera de valores Error al recuperar los datos Error al recuperar los datos Error al recuperar los datos Error al recuperar los datos
