How is 2017 looking for availability of business construction and expansion loans?
Although we may see a slight pickup in rates, business construction and expansion loans look favorable in 2017 especially with the potential of lowering corporate tax rates. Even if the new administration is unable to get everything they promised in the election cycle, a reduction in corporate tax rates will be on the table. We appear to be on track with continued economic expansion because if rates are reduced, corporations should have more funds to spend on expanding business.
How is 2017 looking for investments in general?
I believe 2017 will continue to be a secular bull market; where the overall trend is upward with volatility along the way. One of the reasons why I believe this will continue is the alignment of a Republican President as well as a Republican Congress. Historically this alignment has been favorable for equity markets. In addition markets have shown favorably in environments of lower tax rates and less regulation. Investors seem to be feeling much better about the outlook for stocks since the election with equity inflows on the rise.
How else might the latest economic outcomes impact the markets in 2017?
I believe the biggest headwinds that will affect the market in 2017 have to deal with continued economic growth as corporate revenues and profits increase. In the past the economy has been bolstered by continued low interest rates. We have now seen what appears to be the beginning of economic growth and as this continues the market should respond positively moving forward.
Has the impact of Brexit been felt yet?
It will take years and maybe even a decade for Brexit to be fully implemented and understood. How quickly they are able to remove themselves from the European Union is unknown at this point. Unraveling 40 years of European Union laws affecting Britain will be very complicated not to mention renegotiating all trade deals. At first there was the concern that in a slowing economy the uncertainty in the European Union could push the United States into a recession. As we have seen this has not been the case. In fact it almost feels like the US customer has totally forgot about Brexit. Another concern here is how other members of the European Union reacted in that some had called for votes to leave also. What we do know is that the market does not like uncertainty and this uncertainty is not going away anytime soon.
What is happening with inflation, and what might be around the corner?
One thing we have not had to worry about in the last few years, due to such a slow growing GDP, is inflation. It does not appear that there will be a concern in 2017 either. Although policies championed in the election cycle have historically led to economic growth it will take time for those policies, if actually placed into law, to take effect causing an increase in GDP and therefore pressures for inflation. It would not be unreasonable to expect a few more interest rate increases in 2017 but at a very slow rate if the economy shows some life.
To A Prosperous New Year,
Bill