Guest post by Joe Hoft
1st Quarter 2018 Results are just starting to be reported for US companies and expectations are that because of President Trump’s economic measures, the ‘bottom line’ or net profits for these companies will be the best 1st Quarter results ever!
2017 was a very good year for the Dow, S&P 500 and all the major US stock indices. The Dow set numerous records such as having 70 all- time highs by year’s end. President Trump’s first year in office was arguably the best year ever for the Dow. (See our summary of year-end results including the Dow).
The S&P 500 also had an incredible year. 2017 was the first year in the S&P 500’s history that every month netted a positive increase for the overall index, and it increased a total during the year of 21.7%. The same index by October reached a record set 20 years prior by recording its 6th straight day ending in a new all-time high.
President Trump’s efforts to increase jobs through growth paid off as regulations were cut and industries like coal and oil were virtually opened up for business through regulation cuts. In addition, the tax code was revamped resulting in a tax regime that is more business and individual friendly. Tax rates were cut and Americans and American companies were awarded significant changes to their tax rates starting in 2018.
For individual tax payers the Trump tax cuts will lower rates and double the amount of standard deductions from each payer’s tax bill. Corporate results will be just as significant with the corporate rate being cut from 35% (one of the highest rates in the world) to 21%.
As a result of these tax cuts, most US Corporation will deliver a net income in their financial results that is 14% greater than prior year. This starts in the 1st Quarter of 2018 and the results for many major companies will begin being reported in the next few weeks. This means that for every large corporation reporting financial results in the US, the net income after taxes will be increased by 14% – an unheard of increase!
With many companies reporting their best year’s results ever in 2017, and the economy on fire, and taxes being cut by 14% – expectations are that the net income for these companies in the 1st Quarter of 2018 will be the best ever and this will continue from this point forward!