Morgan Stanley on market movement
Morgan Stanley’s (MS) Mike Wilson shared his view on Trump’s agenda in a recent interview. He believes that there are various factors that are supporting the S&P 500 Index’s (SPY) (SPX-INDEX) movement. In the previous part of this series, we discussed that stronger earnings growth and sales growth could drive the S&P 500 Index higher.
Morgan Stanley on tax reforms
Wilson believes that the US economy (IWM) (IWF) (QQQ) won’t get the benefit of tax reforms in 2017. He believes we could see tax reforms in August or September of 2018. Thus, 2018 could be an important year for investors. He also said that his firm’s confidence about tax reforms is improving gradually.
He said, “Our confidence level in tax reform/cuts has risen with the administration’s demonstrated political success around ACA repeal.” He added, “The prospect of tax reform should disproportionately benefit energy, tech, healthcare, telecom and small cap stocks.”
Wilson believes that we could see tax reforms in about a year, and he also thinks that the S&P 500 Index could touch nearly 2,700 by then. Tax reforms could have a huge impact on the US economy (VFINX) due to their potential to increase corporates’ net profits, which could help them with capacity expansion and new projects. Higher net profits could also improve employment.
In the next part of this series, we’ll analyze Wilson’s view on the energy sector (XLE).