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Anthony Chan Spring Economic OutlookVideo

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Transcript: <p>2017 Spring Economic Outlook Video Transcript &nbsp;</p> <p>Intro Text: J.P. Morgan</p> <p>Boxed Disclosure:<b> INVESTMENT PRODUCTS ARE: NOT FDIC INSURED, NOT A DEPOSIT OR OTHER OBILIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES, SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.</b></p> <p>Title: Spring Economic Outlook <br> Change.&nbsp; Growth. Uncertainty.</p> <p>Lower Third: ANTHONY CHAN, PHD CHIEF ECONOMIST, CHASE</p> <p>Hello and welcome to our Spring Economic Outlook. I'm Doctor Anthony Chan, Chief Economist for Chase. Today we'll talk about the new administration of President Trump and what it can mean for the economy, the markets and your investment portfolio. President Trump's administration can be summarized in three words. First, Change. There is little question that this is likely to be the most pro business administration in recent memory. Growth. Lower personal and corporate taxes and increased spending is likely to promote faster economic growth in 2017. And finally, uncertainty. (call out: Change, Growth, Uncertainty) There is little question that unconventional and unpredictable results will occur under this administration.</p> <p>Divider Slide: Corporate Tax Cuts</p> <p>Corporate tax cuts are very positive for investors. Lower taxes boost corporate earnings. And, higher corporate earnings usually result in higher stock prices. To give an example. As the president has proposed, lowering the corporate tax rate for 35 to 15%. If that were to happen, each 1% cut in the corporate tax rate usually boosts S&amp;P 500 earnings by about $1.25. That, of course, can boost corporate profits by more than 25%. (call out:+25% Corporate Profits)</p> <p>Divider Slide: Repatriation of Foreign Earnings</p> <p>Repatriation will also benefit, not only the stock market, but the economy. The estimates are that there are approximately 2.6 trillion dollars (call out: +2.6 Trillion in Overseas Earnings) in untaxed corporate profits abroad. The last time we had a repatriation holiday in 2004, almost 70% of the money came back to the United States. What will corporations do with that money? The last time almost 70% was used for corporate stock buy backs and dividends. If that happens again, it has the potential to boost the market capitalization of the S&amp;P 500 equity market by as much as 5%.</p> <p>Divider Slide: Fiscal Stimulus</p> <p>President Trump has promised to end austerity, as we know it. During the campaign, the President promised to lower personal taxes, lower corporate taxes, increase defense expenditures and increase infrastructure spending. (call out: Personal Taxes, Corporate Taxes, Defense Spending, Infrastructure) All these programs are likely not only to boost overall economic growth but to also put more money in the pockets of U.S. consumers. And so far these promises have already boosted business confidence and consumer confidence to levels we have not seen during this entire economic expansion.</p> <p>Divider slide: Trade Policy</p> <p>The impact of President Trump's trade policies are not as positive for either corporate profits or for the U.S. economy. For example, the border adjustment tax is likely to reduce some of the benefits from lower corporate taxes. How much? By anywhere from as much as a half to two thirds of that benefit. We also know that there is some talk that the president could impose tariffs against our major trading partners. Such as Mexico, China,Germany, Japan and even to a lesser extent, Canada. And if that were to occur, we cannot rule out the possibility of a trade war. While we view the probability of this scenario being quite low, we cannot rule it out entirely.</p> <p>Divider Slide: Fed Policy</p> <p>The federal reserve remains a wild card. Unemployment is near a historical low and even the number of people filing for unemployment insurance is at a level that we haven't seen in more than 40 years. All this suggests that the economy has a risk of overheating. And in this environment, the Federal Reserve will not hesitate to react. We expect the Federal Reserve to raise short-term interest rates anywhere from two to three times in 2017. (call out: 2-3 Rate Hikes)</p> <p>Divider Slide: Market Outlook</p> <p>We are looking for real GDP in the United States to grow as much as 2.2%, (call out: GDP: +2.2%) compared to 1.6% last year. Our forecast is that the S&amp;P 500 will go up anywhere from 6 to 8 percent in 2017. (call out: S&amp;P 500: +6-8%). But with many of the economic proposals put forth by the President of the United States, we think that there's a possibility that the equity market could go up as much as 10% or higher. Yes, there are some global risks out there. Monetary policy around the world is likely to be less stimulative. There are risks with Brexit. And growing populism in Europe is also a threat. And that's one of the reasons why in our portfolios, we continue to overweight US stocks. Yes, the economic expansion is now eight years old. But with the introduction of the President's stimulative programs, we believe that this economic expansion (call out: Expansion Continues) still has room to grow into 2017 and beyond.</p> <p>Outro Text: J.P. Morgan</p> <p>Disclosure:</p> <p>Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.</p> <p>This video and its content have been developed for J.P. Morgan Securities LLC clients and prospects, is for informational and educational purposes only, and is designed to provide general market commentary and information relating to certain services offered by J.P. Morgan Securities LLC, an affiliate of JPMorgan Chase &amp; Co. Opinions expressed herein are those of Anthony Chan and may differ from those of other J.P. Morgan employees and affiliates. The information in no way constitutes J.P. Morgan research and should not be trusted as such. Further, the views expressed herein may differ from that contained in J.P. Morgan research reports.</p> <p>The information and views expressed are not intended to provide specific advice or recommendations for any individual. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation, you should consult your Advisor. Investments in international or emerging markets can be more volatile and involve a greater degree of risk.</p> <p>&quot;Chase Private Client&quot;&nbsp; is the brand name for a banking and investment product and service offering.</p> <p>Bank deposit accounts, such as checking and savings, may be subject to approval. Deposit products and related services are offered by JPMorgan Chase Bank, N.A. Member FDIC.</p> <p>Certain bank managed advisory products and related services, such as custody services, are offered by JPMorgan Chase Bank, N.A. and its affiliates. These assets are segregated by law and are not subject to FDIC or SIPC coverage. Other investment products and services are offered through<b> J.P. Morgan Securities LLC </b>(JPMS), a member of FINRA and SIPC. JPMS is an affiliate of JPMorgan Chase Bank, N.A. Products not available in all states.</p> <p>®2017 JPMorgan Chase &amp; Co.</p>

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