The Cro Capital Report

Good morning, and welcome to the newest edition of The Cro Capital Report, your weekly update on market dynamics, energy shifts, and portfolio positioning. Today, we focus on the GOP’s major new tax bill and its wide-reaching effects.

Introduction: The Tax Bill’s Market Impact

A new $3.8 trillion tax bill has narrowly passed the House and now heads to the Senate, where it's stirring up debate. While some see it as a driver of economic growth, others worry it could lead to more debt, market instability, and big cuts to social programs. As the Senate debates its future, Cro Capital is tracking how this bill might shake up everything from bond yields to small business taxes.

Markets at a Glance Month-over-month (May 5–June 5, 2025)

• S&P 500: $5,961.45 — ↑ 5.51%

• VIX (Volatility Index): 18.41 — ↓ 21.83%

• 10-Year Treasury Yield: 4.4% — ↑ 0.03%

• U.S. Dollar Index: $98.74 — ↓ 1.89%

• Crude Oil: $63.40/barrel — ↑ 10.96%

• Copper: $4.92 — ↑ 4.71%

• Gold: $3,378 — ↑ 1.70%

• Uranium: $71.40 — ↑ 1.71%

Markets are showing mixed signals this month. While stocks have surged with the S&P 500 up over 5%, volatility has significantly eased, reflecting growing investor confidence. Treasury yields have inched higher, signaling cautious optimism about economic growth, even as the U.S. dollar has softened nearly 2%. Energy commodities like crude oil and copper have posted strong gains, supported by stable demand and supply dynamics. Meanwhile, gold and uranium prices have edged up modestly, reflecting ongoing shifts in energy policies and safe-haven interest.

Cro Capital sits just under 5% in year-to-date gains, outperforming the S&P 500’s 1.21% return by over 350 basis points. This strong performance reflects our focus on macro-driven themes and high-conviction trades across energy and policy-sensitive sectors.

What’s in the Bill?

This tax bill touches nearly every corner of the economy. In the financial markets, it’s already pushing Treasury yields higher as investors grow uneasy about the ballooning national debt and long-term inflation risks. Some are even questioning the strength of the U.S. credit rating. That uncertainty is creating ripple effects across stocks and bonds.

In healthcare, the proposed Medicaid cuts could hit hospitals, clinics, and insurance companies hard. Millions of Americans may lose coverage, which would likely reduce demand for healthcare services and medications. Meanwhile, small businesses are bracing for more audits. The IRS plans to crack down on those who used pandemic-era tax relief like the Employee Retention Credit, raising concerns that smaller firms will take the brunt while big corporations avoid scrutiny.

For everyday consumers, there are some wins. The bill would eliminate income tax on tips and overtime, meaning more take-home pay for service workers and hourly employees. There are also tax credits for buying U.S.-made cars, which could help boost the domestic auto industry.

On the global front, $220 billion in new defense and border security spending could shift trade relationships. New tariffs and policy changes may also complicate how the U.S. interacts with key trading partners—potentially sparking tensions abroad just as energy and technology supply chains grow more interconnected.

What Are the Potential Upsides?

While the bill has sparked debate, there are some potential benefits including 2017 Trump-era tax cuts being extended, potentially encouraging business investment and consumer spending. Wages may also increase with some estimates saying workers could see $11,600 more in pay on average, and families could get $13,300 more in take-home income with no tax on tips and overtime giving a direct boost to hourly workers.

What Are the Risks?

But the tradeoffs are real. The U.S. debt-to-GDP ratio could climb well beyond its already high level, pushing bond yields up further and shaking investor confidence. At the same time, cuts to social programs like Medicaid and food assistance are drawing criticism, especially as inflation concerns grow. Some analysts warn that the government could allow inflation to run hotter as a way to shrink the real value of the debt, risking a weaker dollar and rising everyday costs for consumers.

It is important to note that this bill is projected to add an additional $2.4 trillion to the federal deficit over the next decade and could leave approximately 10.9 million more Americans uninsured, according to the nonpartisan Congressional Budget Office. The scope and scale of these changes underscore the significant economic and social consequences embedded in the legislation.

As the bill moves forward, lawmakers from both parties express strong opinions, with some emphasizing the goal of improving Americans’ lives, while others voice serious concerns about its impacts. This ongoing debate highlights the complex challenges in balancing fiscal policy, healthcare access, and economic growth.

Energy Sector Focus: Trouble for Nuclear

The bill would eliminate a tax credit for zero-emission nuclear power, cut funding for advanced nuclear tech (like small modular reactors), and block investment from foreign companies (like China and Russia) in U.S. nuclear projects.

This means fewer incentives to build nuclear power plants, and utilities may turn to cheaper but dirtier fuels like coal or natural gas. That’s a setback for clean energy goals and a possible tailwind for fossil fuels.

Final Thoughts from Cro Capital

If the bill passes, we could see Treasury yields rise further as the increased deficit pressures bond markets, potentially causing bond prices to fall. Stocks may experience mixed reactions—large-cap corporates could benefit from tax cuts, boosting earnings, while small caps might struggle under tighter IRS audits. Inflation risks could intensify due to increased government spending, adding volatility to the markets. If it fails, current policies remain in place, but uncertainty will persist, leaving investors cautious.

In response, Cro Capital has taken a cautious approach by trimming some of our small-cap, higher-risk positions and increasing our blue chip and cash holdings while we try to navigate the uncertainty ahead. At the same time, we remain confident in our uranium investments, maintaining our full positions. We believe the fundamental demand for uranium, driven by global energy needs, will endure beyond any short-term policy changes, providing a durable opportunity regardless of the bill’s outcome.

Thanks for reading the Cro Capital Report! Please leave a comment or email us at [email protected] if you want to see any topics covered in our next newsletter or for general feedback!

*The information provided in The Cro Capital Report is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. The views expressed are those of Cro Capital and are subject to change at any time without notice. While we strive to ensure accuracy, we make no representations or warranties as to the completeness or reliability of the content. Always do your own research and consult with a licensed financial advisor before making any investment decisions. Investing involves risk, including the potential loss of principal.