Steve Forbes, chairman and editor-in-chief of Forbes Media, told Newsmax TV that he is optimistic that stocks have room to reach new records as President Donald Trump pushes forward with his pledge to cut taxes and regulation.
“Markets always try to anticipate the future. One of the reasons it had such a big surge since the election, especially small-cap stocks, is in anticipation of deregulation which the president started and I think he's going to follow through on that,” Forbes said Thursday to Steve Malzberg on Newsmax TV's "America Talks Live."
The Dow Jones Industrial Average rose as much as 16 percent to record highs since Trump’s election victory on Nov. 8, with banks like Goldman Sachs Group Inc. climbing 40 percent on the possibility of less onerous financial regulation. The Russell 2000 index of small-cap companies climbed 19 percent by last week but has since settled back at levels first reached in early December.
“It's going to take a lot of relentless work especially with Congress and these agencies, by gaining a good tax bill that's the next big thing on the table and start to repair our broken healthcare system,” Forbes said. “You get that corporate tax rate from 35 percent down to 15 percent, that automatically raises your profits 20 percent.”
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Republicans lawmakers this week took steps to repeal and replace the Affordable Care Act, also known as Obamacare. Conservative and moderate members of the GOP have criticized parts of the plan, which also faces strong Democratic opposition. After changes to healthcare, Republicans plan to turn to tax reform later in the year.
Forbes is against the idea of taxing imported goods and subsidizing exports as a way to protect U.S. workers from trade deals that have encouraged companies to send factories overseas.
"It's ridiculous. It's a step to value added tax and value added taxes hit the very people who have elected Donald Trump president," Forbes said. "It's going to raise the cost of gasoline for millions of motors 30 cents a gallon, raise the cost of vehicles $2,500, raise the cost of stuff you buy at Wal-Mart and Kmart. Do you want to do that to finance a corporate tax cut? Oh, I can see the Democrat ads on this already."
Forbes said Trump appears committed to the growth message that guided his campaign, which included economic advisers like Larry Kudlow and Stephen Moore recommending tax reform to create better incentives for growth.
"People like Larry Kudlow will be weighing in through the public media or whatever so his advice will be on the table," Forbes said. "The president is going to push this pro-growth agenda. If he pushes it, people working for him will fall in line. That's the nice thing. You set the tone, they will follow."
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