How Will The Market Change Once President Trump’s Tax Cuts Really Kick In? February 4, 2018
Guests: David Hightower and Paul Mladjenovic
The Income Generation With David J. Scranton
As for President Trump vowed again in the union speech to increase spending for infrastructure in the military. But that may be easier said than done in light of our current $440 billion Federal deficit and rather than lowering short term interests rates, this time the Feb is eager continue raising them. So eager in fact that I’ve talked of this as another potential head win for the economy. If they should hike rates to all time high soon, a new high we can end up with a flat yield curve, which as we’ve discussed before could be a major setback to growth. In fact one can argue that the flat yield curve is happening based upon current treasury yield. The two year treasury yield is just shy of 2.2 %, the 10-year treasury yield is up now over 2.7% and the 30-year is still shy of 3%. Meanwhile the federal funds rate is still at one quarter to one and a half percent. So, that already pretty flat. Don’t forget that six years after Presidents Bush pull us out of the 2001 recession, the houses crisis hit and stock market experience second down turn for the century, and almost 60% drop. Now if you are a regular viewer of the show you already know I that I believe a third major drop is overdue.Although we may not see it in 2018, investors with 10 years of retirement should keep in mind that the potential does exist, and should weigh the risk of another 10% market gain against risk of another 50% or greater market drop. Now if you saw my 2018 market forecast show a few weeks ago, you may recall my forecast to the stock market and have a double digit year. The catch is it could double digits on upside or on the downside if the tipping of point should occur. There is also one little more red flag that could spell trouble for the economy and force the market to make fundamental sense again with a major pull back. This one has relevance for the income generation particularly so make sure you stick around.
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