Jan 7 2017
President Trump’s election was followed by the promise of a significant fiscal stimulus and hopes (not promises) of income-tax cuts. The financial outlook throughout the month of December has remained consistently positive till now.
An overall positive financial outlook prevails
Marketers are actually busy seeing a very rosy picture – as far as every sub-sector is concerned-interest rates, stocks and credit derivatives. For them things are much better than what they were in November.
Talk about the market for the interest-rate futures and let us tell you that traders were lately busy speculating the economies that will register a fast growth. They were increasingly betting on a 1.6% rise in US dollar deposit rate by December 2017.
Are they being hopelessly optimistc?
Lately, Americans have demonstrated a significant degree of confidence in the financial health of corporate America. It’s quite strange to note that such kind of confidence persisted even when the five-year default insurance cost on $10 million in debt fell to $68,000 from $76,000 in early November.
It would be wrong to claim that investors are irrationally hopeful about tax-cuts and deregulation under Trump’s regime. Trump’s promises of fiscal stimulus have even encouraged the Organization for Economic Cooperation and Development to estimate a 0.4 percentage point to the country as far as economic growth in 2017 is concerned. Add to it the corporate tax cuts proposed by the President. Corporate profits are tipped to go up thereby justifying lower costs of default insurance and higher stock years.
So much depends on Trump’s implementation of plans Though Trump’s financial plans have encouraged an overall positive financial outlook, it remains to be seen how he chooses to implement these plans- because everything will depend on that. His plans are still considered vague and brook chances of going horribly wrong as well. However, there is overall low probability regarding such outcome.