Riding the Back of the Bull Market in High-Yield Assets

Evidence of a stronger economy is showing up in the economic data as well as third-quarter earnings.

And it’s not just the upbeat performance from the past three months that has investors’ attention. It is that the market is enjoying the benefit of several tangible and intangible catalysts that are fueling the string of record closes for the major averages.

If robust earnings weren’t enough in themselves to pace the buying spree in stocks, there is also rising optimism about tax reform becoming a reality during the fourth quarter of 2017 or first quarter of 2018. After a deal was struck to extend Obamacare for another two years, the table was set for President Trump to finally put a check mark in the win column. The year is fast coming to a close and he has no major agenda items on his scorecard yet.

Financial deregulation, the proposed wall along the Mexican border, health care reform and massive infrastructure spending have failed to materialize even in the form of a congressional committee to formulate policy or a bill. Trump has used a pen and a phone to get some results, but this isn’t what his base voted for and it is clear he underestimated the resistance from the Republican establishment that has caused more delays than the folks across the aisle. If tax reform is passed, it likely will have several modifications built in to appease special interests. That I’m pretty sure of.

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