Question

The stock market is reactive to macroeconomic and geopolitical events or conditions– events/conditions that impact the national, or even the global economy (not events that impact only one or more of your companies such as the retirement of a key executive). To answer this one, you will need to develop a sense of macroeconomic events/conditions that impacted the market for the past 3months. The purpose of this question is for you to keep abreast of national/world events, in particular as they will impact the stock market. Your goal in answering this question is to pick and explain the macroeconomic/geopolitical event that you believe most impacted the stock market during the entire simulations (not just for a few days) – on what were investors most focused during the simulation? Be sure to explain how this event impacted the stock market. This question requires you to keep current with happenings in the financial markets throughout the semester; reading a summary of market performance for a single day (or a few days) will not get the job done!

Answer 1

Soln.:

The Tax cut promises by the Trump were investors most focused during the past three months. The new tax cut and job policy impacted the market in the past 3months and it results into strengthening of the global market.

With new tax cut and job Act. businesses and upper income groups will mostly benefit regardless, while lower income groups will see the initial benefits fade over time or be adversely impacted investors will have more disposable income which makes the stock market more volatile in the begining of the 2018, but by the end of 2018 fedral bank has raise the interest rate which slower down the market variations. As higher interest rates makes it more expensive to borrow.

These figures shows general impact and excluded the effect of exemptions and deductions.  

So, it is expected by the investors that the equities will continue to outperform in 2018.