Last February, just months after Donald Trump shocked the world and won the 2016 presidential election, WPP plc (NYSE:WPP) CEO Sir Martin Sorrell made a prediction: The economy, and U.S. markets, would respond well for the next two or three years to Trump’s policies encouraging deregulation and tax code overhauls.
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What he said then appears to have come true. The Dow, in mid-October, soared past 23,000, hitting its fourth milestone of the year -- a growth experts largely attribute to President Trump’s business-friendly tax cut proposal.
If the GOP-controlled Congress manages to pass tax reform -- an increasingly likely possibility after the House passed the budget blueprint, the first step in overhauling the tax code, Wednesday night -- the markets could continue their unprecedented growth, Sorrell told FOX Business’ Neil Cavuto during an interview on “Cavuto: Coast to Coast.”
“I would still remain bullish about, I think, what the president is trying to do in terms of taxes and deregulation and infrastructure spending holds true. Now how long it lasts for is another question.”
So far, the GOP tax plan, which will be unveiled in its entirety next Wednesday, proposes a cut for middle-class Americans and a reduction in the corporate tax rate to 20% from the current 35%.
But, Sorrell warned there are bubbles forming in the economy and said there could be some industries, like technology, that are undervalued, or some industries, like package goods, that are overvalued. Sorrell’s company is an advertising and public relations firm based out of Ireland.
“The warning bells start to ring when volumes are flat or not growing significantly, if all you’re getting is a little bit of price,” he said. “That is a big warning bell.”