February 8, 2018

Why the stock market is fine: jobs and taxes

More growth lies underneath.
Via Yahoo:
WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits unexpectedly fell last week, dropping to its lowest level in nearly 45 years as the labor market tightened further, bolstering expectations of faster wage growth this year.

...The labor market is near full employment, with the jobless rate at a 17-year low of 4.1 percent. The tighter labor market is starting to exert upward pressure on wage growth.
In another article on Yahoo:
President Donald Trump's $1.5 trillion tax overhaul, touted as major tax relief for individuals and corporations, is showing up in bigger paychecks and bonuses awarded to workers by companies whose tax bills are being slashed.
Despite the Yahoo spin, interviewing people who appreciate the cuts but still do not like president Trump, the underlying fundamentals are this: the job market is historically strong, wages are growing, companies are doing well and the tax cuts are making a difference.

The stock market correction is not unexpected, but the boom is just starting and therefore the stock market will be fine. I said it before and nothing has changed since; this is going to be a strong economic year, even as the bond market and hence investors adjust to the potential for inflation, the market will continue to grow.
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