With stocks at all-time highs, and wall st analysts trying to guess the stock market. Here are several reasons why some of the biggest and best stock brokers on wall st are now very optimistic about the current conditions and about Trump becoming president in 2017. But why should we be so positive about growth and the stock market at all time highs. Well, here are some key elements why you might want to get even more excited.
Over the last 10 years we have seen a 2% GDP growth In the United states, and everyone or the smart traders at least knew we were in the same environment where we would see a 2% gdp growth every year.
So if you look at the tax reform and the way Trump is going to conduct his presidency next year, you will see, that the regulatory reforms, and most importantly the trillions of dollars in infrastructure spending that president Trump is proposing groups like moodies and other outside analyst have said that this could add 1.5% - 2% to our current GDP. This is important because that gives us with the current 2%, that gives us at least 3% to 4% GDP growth rate, and we have not seen that since President Johnson and Ronald Reagan.
What investors to not realise is that you value the market quite different if you have a GDP growth rate of 3 or 4%. This means in a more positive way. Because even though stocks are at all-time highs, it means valuations are less based on future growth rates.
Now, it could be all wishful thinking, because right now Trump is just the president elect, and some traders are very sceptical that once Trump is in the White House and barking orders at congress, he might not be able to deliver some or all of his policies he keeps promising to deliver to the people of the United States. And ultimately a lot is going to depend on congress.
On the whole, we can insinuate, and gossip about what Trump will or won’t do. But it’s more astute to dive right down into the current numbers. And the current numbers for infrastructure spending and proposals, that literally has bipartisan support. In fact certain surveys say that more democrats will vote for infrastructure spending than the republicans. So that is quite healthy here at the end of 2016. But it will most certainly have the majority of the support in the house and the senate.
You need to look at regulatory reform. You must realise that these are things that president Obama did through executive orders, because he could not get democrats to support these sorts of things after they went into legislation.
So that will mean in 2017, a lot of these regulatory reforms are going to come to the surface and will pass, and will be good for the US dollar, the commodities and especially stocks and equities in 2017. Especially if you concentrate on sectors such as tech, financials and also infrastructure. These are the areas set to boom under a Trump presidency.