Looking ahead at US growth for 2018, the coordinated global economic growth environment should be good news for equity investors in general. It should continue to bolster companies’ profits, and could push up US growth. Similarly, lower corporate tax rates in the US should increase companies’ profits and boost US GDP by 0.3% in 2018 according to Merrill Lynch. These effects mean US growth should remain healthy in 2018.
Among the biggest threats to the rally are stretched valuations, rapid inflation, higher bond yields, a more aggressive Federal Reserve policy that leads to a faster-than-expected increase in interest rates, and renewed tensions with North Korea. We advise clients to maintain a diversified portfolio invested in financially strong, growing companies that should continue to produce attractive returns whatever the economic and political weather. This will continue to be our policy. We believe these efforts will continue to add value to your portfolios in the months and years to come.
