2017 Year End Review & Outlook

2017 Year End Review & Outlook

Market Overview: Winds of Change Delayed But Likely Coming…

2017 surpassed just about every market observer’s expectations, providing a strong year of returns for equities both here and abroad. While a pro-business climate including the potential for less regulation, tax reform and infrastructure spending were themes heading into the year, only the unwinding of significant regulation put in place over the prior decade or so actually impacted the broader economy and financial markets in a meaningful fashion. While tax reform legislation was enacted very late in 2017, its impacts won’t be felt until February at the earliest and not fully until much later in 2018. That said, equity markets did respond positively to the legislation, rallying into year-end and more thus far in 2018, but the full benefit likely remains to be seen. Additionally, infrastructure spending, the third leg of the administration’s growth stool has no better than 50/50 odds of being approved given the partisan rancor in Washington. Financial markets and equities really liked what they have seen thus far and animal spirits for higher growth in the coming years are visibly present. The current bull market in equities is in its later stages (and can continue for some time) requiring a greater level of discipline from an allocation and valuation perspective.

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