should you start a new business in a goldilocks economy

No wonder Bank of America’s shares continue to outpace rivals and the broader market by such a wide margin. Indeed, CEO Brian Moynihan has said that tax reform is a good thing for BofA in the long run. That’s a big number, but shareholders have nothing to fear. Bank of America ( BAC (opens in new tab), $30.55) said the new tax law should result in a $3 billion accounting charge from writing down deferred tax assets when it reports quarterly results on Jan.and not too hot to set the stage for much higher market volatility.” Analysts at Keefe, Bruyette & Woods say, “This is a Goldilocks economic setting ideal for financial stocks – not too cold to worry about declining (interest) rates. More importantly, economic and financial conditions were quite favorable for banks even before changes were made to the tax code. This earnings season might make things look complicated, but the simple reality is that tax cuts are good for banks. Citigroup ( C (opens in new tab)) and Bank of America ( BAC (opens in new tab)) also announced large accounting charges related to corporate tax reform.

Goldman Sachs ( GS (opens in new tab)), for example, said in late December that it would take a one-time $5 billion tax hit in 2017, mainly for repatriating earnings held abroad. Indeed, we’ve already seen some heavyweights come out with big revisions to their 2017 tallies because of changes to the tax code. Thanks to the timing of the passage of a new tax law, accounting rules are forcing some banks to take charges in their fourth-quarter results. Bottom line: 2018 is expected to be an especially good year for financial stocks, and not just because of lower effective tax rates.įirst things first.

Should you start a new business in a goldilocks economy