After hitting a 25-year low in 2010, small business confidence has slowly moved higher over the last six years, and then surged following the U.S. election. Optimism is now hovering near 30-year highs despite a dearth of fiscal policy details. What is this spike telling us? Markets and forecasters are expecting the Trump Administration to deliver a corporate tax cut, although it likely won’t be implemented until 2018. Lower taxes and a looser regulatory environment may translate to an increase in capital expenditures, hiring, and generally more spending. The optimism may signal the beginning of a virtuous cycle and several quarters—if not years—of economic expansion in the U.S.
Groupthink is bad, especially at investment management firms. Brandywine Global therefore takes special care to ensure our corporate culture and investment processes support the articulation of diverse viewpoints. This blog is no different. The opinions expressed by our bloggers may sometimes challenge active positioning within one or more of our strategies. Each blogger represents one market view amongst many expressed at Brandywine Global. Although individual opinions will differ, our investment process and macro outlook will remain driven by a team approach.