Expect regulatory rollback, not corporate tax cuts, to be Trump’s swiftest and most impactful economic stimulant.
While many headlines have attributed the equity rally to the prospect of US corporate tax reform, evidence continues to mount that this reform will be delayed and diluted. However, we do not see this as a cause for alarm: The rally is global, not contained to the US, and began last summer, when most were predicting a Hillary Clinton victory. We believe the rally’s true sponsor was the end of private sector deleveraging and the consequent uptick in global nominal GDP growth from below to above stall speed.
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