US share prices ended 2017 with their ninth monthly gain on the trot: a feat not seen for nearly half a century.
To bears, that looked something like hysteria, induced by the laughing gas of artificially low interest rates. The high will end with a hangover once the West’s central banks start to hike in earnest, they declared.
But now, as companies start calculating the huge impact on their profits of Donald Trump’s $1.5 trillion tax cuts, it makes a lot more sense.
While they’re yet to calculate the longer-term savings from the changes, you can start getting a flavour reflected in the writedowns companies are preparing to take now in the future value of their deferred tax assets.
It’s complicated but, as one company put it earlier, you can see the hit going through now as a mirror of the kinds of tax cuts firms will benefit from in the coming years.
For Shell and BP alone, the sum totals $4 billion. For Barclays, it’s $1 billion.
And they’re just the UK firms. Goldman Sachs has put the one-off accounting hit at $5 billion.
Multiply those kinds of numbers across Wall Street’s biggest players and you have some serious billions being invested into US productivity or paid out in dividends.
Perhaps the Dow Jones isn’t so overvalued after all.