Passage of the Trump tax reform through Congress has generated some excitement about the outlook for capital spending over the next few years.
In this report I argue that the excitement is largely misplaced and that a sensible base-case forecast for capex on equipment and software might be about 6% a year for the next two years. The odds favor 2018 being firmer than 2019.
This relatively muted outlook for capex is, however, not bearish the stock market — relative to what might be implied by a capex boom. Indeed this take fits into a theme I have been pushing: that the macro pointlessness of the tax reform is actually a feature, at least for the market, and taken in isolation. FH-180103