While US equity markets have continued to rally, primarily due to corporate earnings, there is concern it may not sustain if the Trump administration fails to stimulate the economy by lowering taxes, cutting regulations, trimming the budget and investing in infrastructure. While there is consensus the White House is in disarray, and Congress is too divided to take decisive measures, we forecast the Republican majority will pass tax reform and other pro-business measures. Those GOP lawmakers face mid-term elections. They fear defeat if markets crash, the economy contracts and no major initiatives have been implemented.
