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Stocks Feeling On Top Of The World


Image source: astudio / Shutterstock.com

What's going on?

Stocks around the world started 2018 with a bang, enjoying one of their best weeks in years and climbing to new record highs in many countries (including Britain and the US).

What does this mean?

Stocks have continued to gorge on the same economic diet that helped spur such stellar returns last year. Data last week suggested global growth remains rosy compared to recent years. Encouraged significantly by the passage of US corporate tax cuts, investors have cranked up their expectations for companies’ profits this year (Why should I care?

For markets: A lot of investors are amped, at least for the near term.

Many Wall Street research analysts have been quick to
ratchet up their predictions for stocks’ performance in 2018. Several influential investors are inclined to agree – albeit some with a warning that the latest burst higher will end with a bust. Buckle up for 2018, everyone.

The bigger picture: Infrastructure spending in the US is likely to be the next big political focus for markets.

Fresh from the fight to pass tax reform, President Trump has said that increasing spending on infrastructure (e.g. airports, railways) is now a major priority, although this may face resistance in Congress. While increased government spending could hurt the economy in the long term, the immediate economic benefit of a major spending package would likely be significant – providing yet another boost to companies’ profits and, therefore, an argument for even higher stock prices.

Originally posted as part of the Finimize daily email.

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