The LPL Research team proudly presents Outlook 2018: Return of the Business Cycle, highlighting the opportunities and potential challenges that may lie ahead for market participants as we get back to the traditional drivers that we’d expect to push the economy and markets forward. Instead of relying on central bank intervention and accommodative monetary policy, we’re turning to some new lead characters to take charge, namely fiscal policy and better business fundamentals. The supporting roles of this new environment will also be key to sustaining economic growth and delivering stock gains.

• Fiscal coordination, with some combination of infrastructure spending, tax reform, and regulatory relief. Given recent progress on the policy front, we expect corporate tax cuts to be a primary contributor to economic activity in 2018.
• Business investment in property, plants, and equipment. Companies are using cash differently now, focusing on increasing productivity and attaining greater market share.
• Earnings growth, supported by better global growth, a pickup in business spending, and potentially lower corporate taxes.
• Active management, which should see continued momentum thanks to a return to fundamental investing, where investors can determine winners and losers based on earnings, sales, cash flow, and so on.

All of these factors, and more, will be important to watch in 2018.