As a member of Leading Real Estate Companies of the World, we are privy to global economic insights from LeadingRE’s Chief Economist Marci Rossell, who takes complex economic issues and makes them relevant to buying and selling real estate. In this edition, we are covering the Forces Driving the Stock Market.
The stock market has rallied aggressively since November, 2016. It’s important to understand the forces driving the stock market, investor expectations and the potential derailments of the rally. Some of the investor expectations that are driving the stock market increases are:
• Expectation of corporate and individual tax cuts
• Expectation of deregulation
• Expectation of infrastructure/defense spending in the next federal budget
These would all provide a boost to corporate profit. However, there are also some possible derailments of that rally:
• Potential trade tensions between the U.S. and NAFTA partners: Plans for a NAFTA renegotiation can create uncertainty in the stock market.
• Deportation: This would create a labor shortage and fewer consumers.
• A stronger U.S. dollar: A stronger U.S. dollar could lead to a border adjustment tax – increasing the value of the dollar by an additional 20-30%. This could be a negative for U.S. manufacturers.
• Generational population changes: Millennials are overtaking the Baby Boomers in the U.S. population. This generation is more risk-averse than prior generations. There is uncertainty regarding how this will affect the markets, corporations and investments.
Contact one of our real estate professionals to learn more.