Thoughts on the tax bill passage
Thoughts on the tax bill passage:
First major legislative win for Pres. Trump and GOP majority. Combining the elimination of the requirement to have health insurance with the tax bill has dealt a major blow to the implementation of the Affordable Care Act (ACA), more commonly known as ObamaCare. The cost of passage of the tax bill from a political view will not be fully known until the 2018 mid-term elections.
The US economy, already gathering strength, will receive additional stimulus from the lower corporate tax rates and potentially a smaller push from the consumers. Concerns are that the US budget deficit will widen further as there does not seem to be corresponding spending cuts by the federal government.
We anticipate stocks will take time to digest the passage of the tax bill as they absorb the impressive up move made this year. We think interest rates will continue to move higher – the longer end of the yield curve catching up with moves already made on the short end of the curve this year.