Washington Sidetracking Markets

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The U.S. manufacturing report has rebounded after a month of contraction; the latest eurozone and emerging markets reports also indicate expansion.

The Senate says they have the votes to pass tax reform, mitigating some of the impact from the latest Washington drama roiling markets. It is likely tax cuts will happen and that will move the already positive earnings trajectory higher. The latest Washington headlines are providing an unwelcome distraction but lack the power to derail the bull market when the economic backdrop is so darn good. Today’s ISM PMI is just another affirmation of economic strength – 58.2% with an employment component up to 64% and 14 out of the 18 industries tracked reporting expansion. The manufacturing renaissance bodes well for accelerating corporate earnings in 2018. So keep your eye on the ball – corporate earnings growth. You can review the lofty manufacturing PMI’s on page 8 of the Global Perspectives™ book.

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