2017 stock market outlook
Thomas Marino
Financial Advisor @ Atrium Financial Associates, LLC | Retirement Income Strategies
With the U.S. election now behind us, 2017 will bring a new administration and a new focus on fiscal stimulus and monetary policy. The incoming administration has expressed a desire for tax cuts, regulatory reductions, fiscal stimulus, and higher interest rates. Let’s take a look at the fiscal stimulus. Republicans will control the House and the Senate in 2017. However, in the Senate the Republicans will not have the 60 votes needed to pass most legislation. The Democrats will keep some power with the filibuster. There are also fiscal conservative Republicans in Congress who do not want to increase the debt. So plans for infrastructure spending may not pass. Total federal debt is now at 105% of GDP, a level only exceeded at the height of World War II; and total nonfinancial debt is now at 245%, a level with no precedent.
The new President-elect has been promoting a deregulatory agenda for the energy and financial sectors in particular. With OPEC trying to flex its muscle recently, it could give a bounce to U.S. Energy producers. For those companies that can be profitable at $50 per barrel, early 2017 may play well. US oil companies can now pump crude at a price almost as low as that enjoyed by OPEC giants Iran and Iraq. The breakeven cost per barrel will determine this success. The Eagle Ford Shale and Permian Basin, both in Texas, are two of the most oil-rich deposits in the U.S. By some estimates, the Permian Basin accounts for 17 percent of total U.S. crude output.