Tags: ed yardeni | trump | tax | cuts | earnings

Ed Yardeni: Trump Tax Cuts Will Have 'Extraordinary' Earnings Impact

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Monday, 05 Feb 2018 09:28 AM

Economic guru Ed Yardeni doesn’t see soaring bond yields hurting the stock-market rally in the long run because President Donald Trump’s sweeping tax reform will have an “extraordinary” impact on corporate earnings.

"Tax reform is just having an extraordinary impact on earnings. Analysts since the tax package was enacted have raised their earnings by $7 a share for this year," Yardeni recently told CNBC.

"We've been reading some of these conference calls the companies had, and it almost seems like they want to pinch themselves. They can't believe how great it is for their business," he said.

For his part, economic guru Larry Kudlow said investors need to keep an eye on the bond market’s reaction to economic data such as wage growth. Employment surged in January and wages rose the most in more than 8-1/2 years, data from the Bureau of Labor Statistics showed on Friday.

The report led investors to expect that inflation will push higher this year as the labor market hits full employment.

Average hourly earnings rose 2.9 percent from a year earlier, the biggest increase since June 2009, compared with a 2.7 percent gain in December. But the average workweek fell to 34.3 hours, the shortest in four months, from 34.5 hours in December.

“The economy is now moving at a much higher growth trajectory, as a consequence principally of the tax reform bill which has been embraced by corporations faster than almost anybody thought possible, including me,” Kudlow said on CNBC. “That means interest rates have to adjust. The Fed may be a little stingier, we’ll see.”

Kudlow was among the economists who advised Donald Trump as a presidential candidate. Trump ran on a pro-business platform of cutting taxes and regulation while spending $1 trillion on infrastructure like roads and bridges. In December, Trump approved a sweeping tax reform bill that cut corporate tax rates and urged companies to transfer trillions of dollars held overseas back to the U.S.

For his part, Trump went to Twitter to tout the jobs data and economy.

"Great jobs numbers and finally, after many years, rising wages- and nobody even talks about them. Only Russia, Russia, Russia, despite the fact that, after a year of looking, there is No Collusion!" he tweeted Friday.

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(Newsmax wire services contributed to this report).

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Surging rates won’t hurt rally, thanks to ‘extraordinary’ earnings impact from Trump tax cuts, says Ed Yardeni
ed yardeni, trump, tax, cuts, earnings
Monday, 05 Feb 2018 09:28 AM
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