What investors have to be thankful for this year
Surprisingly, there is much that investors can be thankful for this year. The election is behind us and with that all of the uncertainty that came with it. Last week we saw housing numbers jump up 25% and jobless claims go to the lowest they have been since 1973. Retail sales had their best two months in the past two years. This and other economic data gives us a positive outlook for the rest of the fourth quarter and the beginning of the new year.
Thankful for the tax debate
Across the globe taxes have become the topic of conversation. The US, in comparison to other countries, has the highest corporate tax rates in the world. There is much talk around the world about the US reforming corporate rates. Teresa May, Prime Minister of Great Britten, who doesn’t want to be out flanked, has also come out saying they want to lower their tax rate to possibly the lowest in the European Union. This puts pressure on the US to have a more effective corporate tax policy. This is good news for companies as this money will go directly to their bottom line. France, which is in the middle of an election, is also feeling the pressure to reform corporate taxes.
(Source: Goldman Sachs. Data from http://www.marketwatch.com/story/trump-is-turbocharging-the-stock-markets-v-shaped-surge-2016-11-12)
How to make tax reform happen faster
Tax reform takes time. For example, it would take a long time to repeal The Affordable Healthcare Act. What doesn’t take a long time is the budget reconciliation process, which built the AHCA. This makes it easier to deconstruct it. In light of this, we believe the top areas Donald Trump should attack first are:
- The Affordable Healthcare Act
- Regulatory control
US ranking in economic freedom
We are not guaranteeing these three areas are what the President Elect will attack first. We are simply analyzing the most possible scenarios to see how they could affect portfolios. What we are looking at is a movement in the US for our country to have more economic freedom. According to Investors Business Daily, in 2000 economist ranked the US as number 2 for having the most economic freedom in the world. Since then the US has fallen to a ranking of 16. The opportunity of the new administration is to move the US back up in that ranking.
The world needs more fiscal stimulus
Throughout our vlogs we have been saying that the world needs not only monetary stimulus but also fiscal stimulus. We are starting to see that now and that combination can be good. With the Fed meeting this week, we could be seeing the ending of monetary stimulus. If we see interest rates go up, people with savings and pensions will have a reason to be thankful.
We hope you have a very wonderful Thanksgiving. Contact us if you have any questions.
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Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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