Someone forgot to tell Santa Claus that Christmas is over.

The ""Santa Claus rally," which started the day after November 8, 2016 (Election Day), kept going through Christmas 2016, through all of last year including last Christmas, and is still going strong so far this year. It just keeps giving many happy returns to stock investors.

The S&P 500 is up 31.3% since Election Day (Fig. 1 and Fig. 2). It is up 23.7% since President Donald Trump moved into the White House. Only President Franklin D. Roosevelt’s first year beat President Donald J. Trump’s first year.

However, FDR had an advantage since the stock market had crashed under his predecessor. Trump’s Santa Claus rally comes on top of a bull market that had been going strong during President Barack Obama’s eight years in office.

A few weeks after Donald Trump was elected—the Republican party having won majorities in both the Senate and the House of Representatives—Joe and I raised our 2017 outlook for the S&P 500, expecting that a combination of deregulation and tax cuts would boost earnings. In a Barron’s interview on February 4, 2017, I said:

“It would be a mistake to bet against what President Trump might accomplish on the policy side. I’m giving him the benefit of the doubt, hoping good policies get implemented and bad ones forgotten. We could get substantial tax cuts. All his proposals don’t need to be implemented for the Trump rally to be validated. If you got $1 trillion to $2 trillion coming back from overseas because of a lower tax on repatriated corporate earnings, that would be very powerful in terms of keeping the market up.”

I anticipated that Trump would move quickly to push Congress to enact his tax reform plan. Instead, he pressed for the repeal of Obamacare, which ran into fierce opposition even from a few congressional Republicans. I argued that it didn’t much matter whether the tax-cutting plan was implemented in 2017 or 2018. At the start of 2018, after Trump had signed the Tax Cut and Jobs Act (TCJA) at the end of 2017, the stock market continued to climb to new highs. Joe and I remained bullish and lifted our odds of a meltup from 55% to 70%. However, we also observed in our 1/16 Morning Briefing: “We may be experiencing an extremely unusual earnings-led meltup. If so, it is more likely to be sustainable than the run-of-the-mill P/E-led meltup, as long as it doesn’t morph into one. We’ll let you know if it does. For now, sit back and enjoy the show.”

The happy returns for equity investors continue to mount. As we expected, analysts are raising their 2018 and 2019 earnings estimates significantly following the passage of the TCJA. In addition, companies are starting to repatriate their overseas earnings. The corporate windfalls from the TCJA are trickling down to workers, who are receiving bonuses and pay raises. Undoubtedly, corporations also will use some of their windfalls to boost share buybacks and dividends. Capital spending may also get a boost. The US Treasury stands to cash in “HUGE” —to the tune of hundreds of billions of dollars—during the current fiscal year.

Here are some specifics:

(1) Trump bonuses. Love him or hate him, Trump delivered on his promise to cut taxes and his promise that the cuts would benefit individuals, not just corporations. Lots of middle-income taxpayers will have a lower tax rate this year. In addition, some of them may receive bonuses and wage increases from employers that are benefitting from the corporate tax-rate cut.

Fox Business compiled a list of big corporations that have announced bonuses and pay hikes following the passage of the TCJA. They are Apple, Wal-Mart, AT&T, BNY Mellon, Boeing, Comcast, Fifth Third Bancorp, JetBlue, Southwest Airlines, US Bank, and Wells Fargo. The list suggests that among the big winners from the TCJA are airlines, banks, and retailers.

(2) Performance derby. The performance derby for the S&P 500 sectors since December 22, when Trump signed the TCJA, shows lots of winners to varying degrees: Consumer Discretionary (6.7%), Health Care (6.6), Energy (6.1), Tech (5.6), Industrials (5.4), Financials (5.1), Materials (4.8), S&P 500 (4.7), Consumer Staples (1.9), Real Estate (-3.3), Telecom (-3.3), and Utilities (-4.8).

(3) Treasuries windfall. Last week, Apple announced that it will be paying $38 billion in taxes from profits made overseas. That implies that Apple will be repatriating $253 billion in profits, assuming they are all taxed at the new 15.5% tax rate (if they were held in liquid assets). Debbie and I have added up the quarterly data reported by the Fed for foreign earnings retained abroad by nonfinancial corporations (NFCs) since 1986, when the data start (Fig. 3). They added up to $3.5 trillion during Q3-2017. Applying a 15.5% tax rate (under the TCJA) on that total would produce a $540 billion revenue windfall for the US Treasury. The actual windfall is likely to be closer to $300 billion, and won’t offset the deficit-widening impact of the cut in the corporate tax rate over the next 10 years.

By the way, the Fed’s data can be used to calculate a global effective tax rate (GETR) for NFCs, by dividing taxes on corporate income by profits before taxes (Fig. 4). This measure is misleading because foreign profits retained abroad (which were not taxed in the US) are included in the denominator. Subtracting them from profits shows a domestic ETR of roughly 26% over the past few years, well below the statutory rate of 35%. However, it too may be misleadingly high because it includes taxes paid to other foreign and domestic taxing bodies. Then again, it may understate the federal ETR because it includes the profits of sole proprietor corporations, but not the taxes they pay on dividend income to their owners as individual taxpayers. As we’ve concluded before: It’s hard to use the macro data to come up with a clean ETR paid by corporations just to the federal government.

(4) Permanent tax holiday for overseas earnings. The TCJA moves the US from a worldwide to a territorial tax system, which means that corporations will no longer be required to pay domestic taxes on dividends received from foreign affiliates. The Joint Committee on Taxation (JCT) has estimated that the repatriation will raise $338.8 billion over 10 years by taxing the previously sheltered trillions in overseas profits, a one-time transition tax payable over eight years, with the proceeds heavily concentrated in the first year, 2018. The JCT tables show that by 2027, this provision actually starts to lose money.

(5) Great Rotation. The bad news is that bond yields are rising. For now, that isn’t a problem for the stock rally, which may actually be getting some fuel from funds rotating out of bonds and into stocks. The 10-year Treasury bond yield is up from last year’s low of 2.05% on September 7, when Trump’s agenda seemed to be sinking into Washington’s swamp, to 2.64% on Friday (Fig. 5). Expected inflation, as implied by the 10-year TIPS yield, rose from 1.79% to 2.06% over this period (Fig. 6).

Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research.