Bright outlook for risk assets in 2018
But a tax cut will further exacerbate US debt and deficit, and will eventually be a drag on economic growth, says JP Morgan Asset Management chief strategist
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INVESTORS would do well to stay exposed to risk assets which are likely to fare well through 2018, says David Kelly, JP Morgan Asset Management's chief global strategist.
There are a few reasons for this. One is that the Trump administration's proposed tax bill, which cuts taxes for businesses and individuals, is expected to keep the economy humming at a 3 per cent clip or higher "for a few quarters''.
Corporates will also benefit with a tax cut which should underpin stock gains. The cuts, however, will cause US deficits to rise and this in turn is expected to dampen the US dollar. A weaker US dollar makes US corporates more competitive and is also a positive for emerging market assets.
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