The essence of the “Big Beautiful Bill”

On July 4, 2025, President Donald Trump signedhis landmark “One Big Beautiful Bill” into law, a 900-page legislation with thepotential to radically change the course of the U.S. economy. Advancing thoughCongress through the budget reconciliation process on a thin party-line vote(51-50 in the Senate and 218-214 in the House), the bill represents one of themost bold tax experiments in modern history.

The Trump administration has called it “thegreatest middle-class tax cut in history” and forecasting an imminent “economicboom”, while critics, including the Congressional Budget Office, are soundingthe alarm,warning of a potential multi-trillion dollar surge in the nationaldebt and the most significant rollback of social programs in a generation. Fortraders and investors, the bill creates a sharp, two-sided market dynamic.

Tax Reform: What Changes for Citizens and Businesses

The core of the bill is a tax reform thatcontinues and expands the policies started in 2017.

For Citizens and Families

The most important change is that the personalincome tax rates from the 2017 Tax Cuts and Jobs Act of 2017 will now bepermanent. These tax rates were originally supposed to end after 2025.Additionally, the standard deduction will be permanently doubled, which willsimplify the tax filling process for millions of families.

The law also introduces new but temporary(until 2028) tax deductions:

● NoTax on Tips: Service industry workers will be able todeduct their tips from their taxable income.

● NoTax on Overtime: Income from overtime work will also betax-deductible.

● CarLoan Deduction: Buyers of American-made cars will be able todeduct interest on their car loans.

The temporary nature of these popular benefitsmakes the law seem less expensive officially, but it creates a “fiscal cliff”in 2028. It will be politically difficult for a future Congress to let thesedeductions expire. The Child Tax Credit is also increased to $2,200 per child.

For Businesses and Investors

The bill aims to encourage investment in theU.S.:

● 100%Bonus Amortization: Businesses can immediately and entirely writeoff the full cost of new equipment.

● R&DCosts Write-off: Costs for research and development in theU.S. can now be deducted in the year they occur, instead of being spread overseveral years.

● TheEnd of “Green” Credits: Many tax credits for clean energy, introducedunder the Biden administration, are being eliminated. This signals a change ingovernment policy to give more support to fossil fuels like oil and gas.

● SALTTax Deduction Limit: The amount of state and local taxes thatpeople can subtract from their income before paying federal taxes has beenincreased. The new limit is now $40,000 up from the previous $10,000. Thischange benefits those living in high-tax states, but for families earning over$500,000 a year, this tax advantage will be slowly reduced.

Reshaping Government Spending

OBBBA fundamentally changes governmentspending priorities, moving huge resources to some areas by cutting fromothers.

Increased Spending: Border andDefense

The bill allocates about $350 billion tostrengthen border control and national security. The money will be used forbuilding a border wall, creating new migrant detention centers, and hiringthousands of ICE officers to deport up to 1 million people per year. Thedefense sector also receives significant funding, including $25 billion for anew “Golden Dome” missile defense system.

Spending Cuts: The Social Sector

The increased spending is being paid for byunprecedented cuts in the social sector. The Medicaid program for low-incomeindividuals will be cut by more than $1 trillion over ten years, the largestreduction in its history. Strict work requirements (at least 80 hours permonth) are being imposed for millions of Medicaid and food assistancebeneficiaries. Failure to meet these requirements will result in a loss ofbenefits. The Congressional Budget Office estimated that about 10.9 millionAmericans could lose their health insurance as a result.

Economic Forecasts: Boom or Debt Trap?

Forecasts of the bill’s consequences arecompletely opposite. Supporters claim the tax cuts and deregulation will leadto the creation of up to 7.2 million jobs and economic growth. However,independent analysts like the Tax Foundation and CBO paint a different picture.They estimate the bill will increase the budget deficit by $3-6 trillion over10 years. Analysis shows the reform disproportionately benefits the wealthiestfamilies, while the poorest risk losing income due to cuts in social benefits.

Fundamental Analysis: OBBBA’s Impact on the S&P 500

The “One Big Beautiful Bill” presents adual-edged sword for the S&P 500, offering short-term stimulus against abackdrop of significant long-term risks.

The Bull Case (Short-Term):

In the short term, the market is positionedfor a rally. The combination of permanent bonus depreciation and immediateR&D deductions will directly boost corporate profits and earnings pershare. This, combined with a massive fiscal injection from defense andinfrastructure spending, creates a powerful crosswind for GDP growth. The mainbeneficiaries in this case will be the defense industry, industrial enterprisesand traditional energy sector.

The Bear Case (Long-Term):

The long-term outlook is clouded bysignificant macro risks:

● Inflation& The Fed: A massive, unfounded fiscal boost could leadto a return of price pressures, forcing the Federal Reserve to keep interestrates high for longer. This would increase corporate borrowing costs and reducestock prices.

● TheDebt Specter: The projected $3-6 trillion increase in thenational debt is the biggest threat. It could trigger a sovereign creditdowngrade and “crowd out” private investment by driving up the cost of capitalacross all of the world.

● WeakeningConsumer Base: Deep cuts to social safety nets will reducedisposable income for millions of Americans, which could negatively impactoverall consumption, causing consumer-oriented industries to suffer.

Technical Analysis: OBBBA’s Impact on the S&P 500

The S&P 500 Index is manifesting strongupward momentum, hitting all-time highs and confirming the strength of theglobal bullish trend. We believe that the uptrend will continue regardless of“Big Beautiful Bill”. The technical analysis of the weekly chart indicates aclear scenario that suggests a corrective pullback before the next significantupward momentum.

A key confirmation of the buyers' dominantstrength was the confident breakdown of the previous structural high.

Key Buying Zone: $5800 - $6150

Our analysis highlights a strategicallyimportant support area, which may become a springboard for a new growth wave.The significance of the $5860 - $6150 range is due to the combination of thesetwo strong technical factors:

1. Weekly price imbalance(Fair Value Gap (FVG 1W): The market is anticipated to seek to fill this"gap" to rebalance.

2. Optimal FibonacciEntry Point (OTE): The 0.705 level inside this zone is traditionally consideredone of the most reliable levels to enter a trend-following position after acorrection.

In case of successful testing of the supportzone and resumption of the upward movement, the main target for the S&P 500index is the level of $6980. This mark matches the Fibonacci level of 1.618,which historically acts as a technically justified target price level for longpositions.

Conclusion

OBBBA is a direct successor and a radicalexpansion of the 2017 tax cuts, making many of its temporary provisionspermanent. Its philosophy is similar to Reagan’s 1981 Economic Recovery TaxAct, which also focused on supply-side economics and led to a sharp increase innational debt.

The S&P 500 suggests a continuation of thebullish rally after a corrective pullback. The strategy is to watch the pricereaction in the support zone of $5800 - $6150. Rebound from the zone ofinterest may serve as a signal to open long positions with a target at $6980.Investors and traders are advised to keep a close eye on these key levels tomake calculated trading decisions.