U.S. stock market indices continue to reach new highs and major global economies are growing in sync for the first time in a decade. Corporate earnings have reached record levels, business confidence indicators are climbing while inflation remains in check.
The stock market continued to hit new highs through the third quarter, confounding those who focused on the rapidly changing headlines in the U.S. and throughout the world.
We think there are ample catalysts for ongoing corporate earnings growth. Growth appears to be broadening to more cyclical parts of the economy, such as manufacturing, as well as outside the U.S. The political climate – including the outcome of the remaining elections across Europe and President Donald Trump’s political agenda – is evolving. We think it will be difficult to predict Trump’s next move, but think tax reform is likely to remain on the agenda this year.
It's not unusual for a new year to bring changes. But 2017 may be particularly noteworthy. Topping the list is a new U.S. president and Republican-controlled Congress, bringing the prospect of a new direction for many policies, regulations and legislative priorities. Elections and leadership changes also are on the calendar in several major countries, including France, Germany and China. What may not change next year are the geopolitical tensions that continue to pressure several regions around the globe.