Ann: CTD FY18 Half Year Results, page-17

I am no US tax expert but here is my take on it.

My first point, there was the whole repatriation tax reduction:

"The new GOP tax law allows U.S. companies to repatriate cash at reduced rates for a limited time. As a part of the tax reform, repatriation tax rates could be as low as 8%, compared to the 35% companies traditionally pay to repatriate that money, the New York Times reports."

There is a while lot of money coming back into the US economy in 2H. That of course doesn't explain why companies weren't spending, just why they will likely see a big increase in spending this half.

As to the other half of the equation:

"To go from over 50% YOY growth to a 1% decline in 6 months due to a possible tax reduction is a phenomental turnaround."

I agree it seems a bit of a stretch, however seeing multiple companies with the same commentary makes me feel more comfortable that it is true. I don't think the decline was due to a possible tax reduction, but rather to the uncertainty as to whether the GOP could even get their tax bill passed. Their record so far getting anything done has been woeful despite having control of the house and senate, and if they were unable to get their tax bill passed I think they would have been considered a lame duck government and things might have gotten ugly. There was also the pending debt ceiling that many worried would see the government shut down (which of course it did albeit briefly).

I know people in the USA who think the tax bill was ludicrous, including company owners who benefit greatly from the bill, however they were relieved to simply have some direction as to what was happening business/tax wise over the next couple of years.

My last point is an explanation for some of the 2H bias in the USA (which of course is their 1H) Firstly, being their 1H many businesses /government departments have a new budget starting in January and so they have new money to spend. Secondly, the US 2H is quite interrupted due to holidays. From Halloween to thanksgiving to Xmas, many companies outside the retail sector etc slow down over this period, some even shutting down for a few weeks. And thirdly, this is winter in the USA which usually sees a slow down as well.

All IMO, however I won't be surprised to see a bounce back in our US TTV in our 2H.