It\u2019s finally done. The Senate adopted the long-awaited inflation reduction act to lower drug prices, raise corporate taxes, and reduce carbon emissions.<\/p>\n
That\u2019s good news for electric vehicle manufacturers and renewable energy & fossil fuel companies since they\u2019ll get new tax subsidies. The act provides for the biggest spending ever made by the government to slow warming and reduce the demand for fossil fuels.<\/p>\n
We\u2019re talking about an investment of more than $400 billion over ten years in tax breaks to encourage consumers to switch to electric cars and spur wind and solar energy. The plan is to reduce carbon emissions by 40% by 2030.<\/p>\n
Clean energy producers (solar panels, wind turbines, and hydrogen fuel cells) will rank among the beneficiaries of the act.<\/p>\n
Here\u2019s how the market reacted at yesterday\u2019s peak:<\/strong><\/p>\n \u2714Manufacturer of solar panels First Solar (#FSLR): +11%, Sunrun #RUN: +12%, and SunPower #SPWR: +4.70% The act expands the $7,500 tax credit provided for buying electric vehicles. Also, it offers up to $4,000 in credit for those who buy used electric vehicles.<\/p>\n Here\u2019s how the market reacted at yesterday\u2019s peak:<\/strong><\/p>\n \u2714Tesla (#TSLA): +5.90% The act is a far cry from Joe Biden\u2019s $4 trillion proposal to transform the U.S. at the start of his term. But it\u2019s far from zero as well.<\/p>\n The plan is to raise $740 billion over the next ten years through enhanced tax enforcement and a 15% minimum corporate tax (affecting companies like Alphabet #GOOG, Meta Platforms #META, etc.), bringing it into compliance with the global minimum tax rate. The act was submitted to the House of Representatives. A final vote is scheduled for this week.<\/p>\n Key figures:<\/strong><\/p>\n \u2714~300+ billion are to pay off the public debt Prescription drugs in the U.S. cost an average of two and a half times more than in other developed countries. Until now, the government couldn\u2019t negotiate prices with pharmaceutical companies.<\/p>\n For the first time ever, this act will enable Medicare to freely negotiate prescription drug prices. The Congressional Budget Office estimates that the act will help free up $288 billion over the next decade.<\/p>\n It’s no surprise that this triggers a flurry of dissatisfaction among the pharmaceutical giants: <\/strong><\/p>\n \u2714They lose hundreds of billions of USD The Democrats hope the $433 billion program will slow inflation over time. Nonetheless, this can happen even before Joe Biden signs the act into law.<\/p>\n If the core CPI, due on Wednesday, fails to live up to expectations and reverses its downward trend since March, the Fed will get another chance to raise interest rates by another 75 bp in September.<\/p>\n Roughly speaking, the Fed has an operational impact. All in all, the new law will take years to bolster the economy.<\/p>\n","protected":false},"excerpt":{"rendered":" The Senate passed the Inflation Reduction Act on prescription drug price reduction, corporate tax increase, and carbon emission reduction. Read the article to learn what it provides for and how the market reacted to it.<\/p>\n","protected":false},"author":1,"featured_media":15117,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[204],"class_list":["post-15105","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics-en","tag-economics"],"yoast_head":"\n
\n\u2714Manufacturer of wind turbines Vestas Wind Systems (#VWDRY): +1%
\n\u2714Developer of hydrogen fuel cell systems Plug Power (#PLUG): +5.50%
\n\u2714Manufacturer of solid oxide fuel cells Bloom Energy (#BE): +7%<\/p>\nSecond<\/h3>\n
\n\u2714Lucid Group (#LCID): +9%
\n\u2714Rivian Automotive (#RIVN): +10%
\n\u2714Nikola (#NKLA): +11%<\/p>\nThird<\/h3>\n
\n\u2714~$64 billion are to expand subsidies for insurance premiums for those who receive insurance under the Obamacare program
\n\u2714$369 billion for \u00abenergy security and climate change\u00bb<\/p>\nFourth<\/h3>\n
\n\u2714Suffering from profit reduction
\n\u2714Damage to innovation and risk research
\n\u2714Bans on raising prices for some drugs annually by more than the inflation rate (we\u2019re now talking about the ten most expensive ones with different time requirements.)<\/p>\nFifth<\/h3>\n