One of the best pieces of news for anyone who wants stocks to go higher, as we get deeper into the December quarter and then rolling into 2018, is the overall optimistic views for stocks from fund managers and economists. Apart from short sellers and failed doomsday merchants, is there anyone else who doesn’t want this?
Pivotal to this positivity will be two important US developments. First, the Congress supporting President Donald Trump’s tax reform measures and second, the pace at which the Fed raises interest rates over 2018. If it’s too fast, Wall Street could easily give into gravity, given US stock markets are into record territory. It has to be remembered that these elevated market indexes were created because there is a belief that Congress will say ‘yes’ to tax cuts and the Fed will time the rate rises to perfection, or at least cautiously so as to ensure the US economy is not prevented from growing at a solid clip.
So let’s assume that neither of these positive expectations turn out to be curve balls for stocks, and that outlook statements for many local companies rested on conservative economic forecasts for the Oz economy, then if our economic growth turns out to be better than expected, we have both external and local reasons to believe stocks head higher.