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Nature abhors a vacuum. So too, in our estimation, does the stock market. Long described as a “voting machine”, the stock market embeds the views of the whole gamut of market participants in producing values for both individual stocks and the overall market. It is a collective wisdom, of sorts, and often prescient.
Which brings us to the Tax Cuts and Jobs Act of 2017 (TCJA). Let’s focus on the corporate cuts first. Without quite knowing its size, which has been variously estimated at between a 5% to 10% boost to overall corporate profits, the market forged ahead 3% in the four weeks prior to the bill being signed, plus a further 7% since.