The past four months has seen one of the most incredible stock market rallies in recent history, as US indices climb higher and higher every day. Not only has the Dow Jones Industrial Average broken through the 20,000 mark for the first time in its history, it is now well over halfway towards 21k. But gains are not limited to the Dow Jones; the blue chip S&P 500 has not seen a daily fall of greater than 1% in over 90 days, while the Nasdaq and small cap Russell 2000 indices have also reached fresh closing and intraday highs numerous times in 2017. What’s more is that this rally can be traced back to a single event in November. The election of Donald Trump.

Now inaugurated, the Trump rally has set off on its second leg as the 45^th US President has quickly set about implementing drastic economic policies, the centrepiece of which is his upcoming self-styled phenomenal tax reform which could be implemented by August according to US Treasury Secretary Steve Mnuchin.

Trump hinted that he would reveal his tax plan 2-3 weeks’ time during a 9 February meeting with Airline executives and his upcoming address to Congress on 28 February certainly fits that timeline. Could the President use the primetime platform to make his announcement? Could we see the rally go even further as a result?

This report will break down what is expected from the reform, highlight other policies that could influence US stock markets and analyse 4 key stocks that could react significantly in reaction to Trump’s tax plan. If you feel like you’ve missed out so far on the Trump rally, you certainly don’t want to miss out on the next opportunity!

What could the reform mean for stocks?

Expectations are that Trump will announce several tax reforms including the lowering of both individual and corporate tax rates. His administration will look at easing the tax burden for middle-income earners, while also looking at reducing the US corporate tax rate, which is currently the highest corporate tax rate in the world at 35%. Prior to his election, Trump laid out his plans for his first 100 days in office in which he included a 35% tax cut for a ‘middle-class family of two children’ and lowering the corporate tax rate from 35% to 15%.

Another less touched upon part of the Trump campaign trail tax plan was the renegotiation the 35% tax which US companies currently pay when returning foreign profits from overseas. As a result, US companies have an estimated $2.6 trillion of profits stashed overseas. Trump wants to see a significant portion of that exiled money returned and may look to do so by decreasing the rate of tax to around 10% as he eluded to in his 100-day plan. Trump’s team hopes that the repatriation of that money will create jobs and reward shareholders with greater capital returns (dividends and share buybacks). With the Apple CFO stating that they would increase capital returns if the tax was lowered, could we even see the world’s largest company benefit from the tax reform?

US companies have already seen their shares rocket on hopes that Trump’s team will provide the biggest tax shake up in decades, but could there still be room to run if he were to reduce rates by an even greater amount?