02
Oct
United States: $5.8 trillion tax reform could prove disappointing
Tax reform has finally been announced. Economic growth is strengthening. Fed balance sheet normalisation begins. Rise in rates and the US dollar. High risk for equities.
Key Points
- In the end, corporate tax will be set at 20% instead of 35%
- Income tax reduced; maximum rate decrease from 39.6% to 35%
- Donald Trump’s tax reform could cost the state US $5.8 trillion
- GDP growth shows that the trend picked up the pace in the 2nd quarter
- Leading indicators confirm that consumption is doing well
- A little more patience is needed to see inflation head above the Fed’s target
- Boost to the upward trend on long rates
- Favourable environment for the US dollar
- The Fed is taking a softly-softly approach to normalising its balance sheet, and will raise rates in December
- Could the S&P 500 benefit from the announced tax reform? “Buy the Rumor, Sell the News”?
