Investment Management – Third Quarter 2017
It appears that investors have finally acknowledged the current synchronized global expansion. A backdrop of steady economic growth, low inflation, and easy monetary policy has created a goldilocks scenario for corporate earnings and stocks. Other key factors driving the bull market are low commodity prices, low interest rates, and tight credit spreads.
Stocks have also rallied on the possibility of tax reform, or at the very least, a cut in corporate tax rates. Lower rates will likely benefit many corporations with an immediate boost to profits, which should spur additional business investment and higher wages. Smaller companies that derive more sales domestically will likely benefit the most, though some large corporations also stand to gain.