Despite House Speaker Paul Ryan promising on Tuesday to pass a tax reform plan by the end of this year, many investors have their doubts.
"I don't think the market expects [tax reform] to happen this year. I think it's extremely optimistic to think that it will," Albion Financial Chief Investment Officer Jason Ware.
Ware believes the White House's priority and pace of handling probes, headlines and health-care reform has left the market pessimistic that tax reform will be passed in 2017.
"As much as Paul Ryan says they don't get distracted by that, the reality is they do," Ware said. "These bills come out of committee and need to get the attention of everyone else in Congress, and it's hard to do that when there's so many challenging news stories."
But even if tax reform fails to pass by the end of this year, Haverford Trust Chief Investment Officer Hank Smith says the market is still set up for a win-win situation.
"If we don't get any of these fiscal reforms that the Trump administration has promised, we're still in this 2 percent economy with very little risk of a recession, and the stock market has proven it can do okay," Smith said.
"If we do get [tax reform], the Trump trade is back on, and I think you'll see some of the sectors that did well in the last two months of 2016 pick up again: industrials, basic materials, financials," Smith said. "Really, it's a win-win either way for this market in our view."
Source: Bloomberg
Junior Trader Stefan Panteleev
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