US job market has improved further, jobless claim as of Feb 2018 is the lowest over the past 50 years, implying more Americans have jobs, having salaries monthly, therefore stronger spending power which would help the bullish US economy to grow further. Currently it is employee market, the company may need to pay higher salary to keep the staff. The bullish No 1 economy (US) would help the rest of the world stock with economy to grow together.
The corporate tax reduction by Trump from 35% to 21% has helped the companies to achieve higher earning by saving of 40% tax. Warren Buffet’s Berkshire Hathaway book value has gone up tremendously by $65 Billions in year 2017, about $36 Billions is from company business, remaining $29 Billions from the recent tax reform. It means for every $2 value gained by Warren Buffett in year 2017, $1 is from the business, another $1 is contributed by Trump through the tax reduction. This is not limited to Warren Buffett company. This is applied to entire US companies, therefore the hidden stimulus plan is massive.
The impact would be tremendous over the next few years, may result in overheated economy and bullish stock market with over-spending, higher inflation, therefore higher interest rate. The recent global stock market correction is healthy, bringing the stock market (price) closer to economy (value). If the wild horse of stock is not tamed, sooner or later it would fall off the cliff (black swan) or tripped over a rock (crisis), hurting the master (economy) and global investors and traders.
It is fine to ride the horse with economy wagon, up the hill of stock market. The rider (stock trader) has to monitor the emotions of horses (especially for unpredictable dark horses, stock which perform inconsistently) as upside will become when running too fast for too long. If the horse could rest from time to time, having enough food (supplied by master through stable economy), the journey of bullish stock market could be longer. Learn how to manage the stock with economy.
