U.S. equity markets are going through a rough patch. There is a lot of political uncertainty as markets predict the odds of the timely passing of President Donald Trump’s tax reform bill. This has increased the appeal of dividend investing.
Trump’s Impact
There is increased uncertainty with regard to Trump’s ability to pass the promised legislations relating to tax reform and deregulation. Although economic fundamentals have been strong, uncertainty over the tax reform has pushed markets lower. Per Washington Post reports, Senate Republican leaders are weighing the impact of a one-year delay in reforms.
Although the House approved their version of the bill, there are significant differences in the bill from the Senate’s version. Markets are therefore worried that this could create hindrance in the timely passing of the legislation.
Trump aims to cut down on stringent regulations to improve ease of doing business. He especially targets to cut a lot out of the Dodd Frank Act as he thinks it restricts business growth. However, there has been no major development in the space and markets are worried about his ability to pass his promised legislation.
Geopolitical Risks
Geopolitical risks have been on the rise. Although the North Korean supreme has been relatively silent over the past few weeks, there has been other developments in the global markets that has been concerning investors.
Saudi Arabian crown prince Mohammed bin Salman looked at tightening his grip on power by ordering a crackdown with arrests of royals, ministers and investors. Moreover, Houthi forces in Yemen fired a missile toward Riyadh’s international airport. The missile was intercepted midway and debris landed near the airport.
“We see this as an act of war,” the Saudi foreign minister, Adel Jubair, told CNN. Saudi Arabia accused Iran of providing necessary support to the rebels. Increased geopolitical risks have led to an increase in the price of oil and investors’ appeal for safety.
Leave A Comment