From Pisani at CNBC not bad analysis.
Theoretically a 20% increase just from the tax rate reduction if firms can maintain sales/margins... does not take into account any increase in leading flows which may/may not manifest next year which would be or may be even more bullish.
President-elect Trump's proposed nominee for U.S. Treasury secretary, Steve Mnunchin, said on our air yesterday that the administration was still targeting a reduction in the corporate tax rate from 35 percent to 15 percent.
The current 2017 estimate for the entire S&P 500 is roughly $131 per share.
Thompson estimates that every 1 percentage point reduction in the corporate tax rate could "hypothetically" add $1.31 to 2017 earnings.
So do the math: If there is a full 20 percentage point reduction in the tax rate (from 35 percent to 15 percent), that's $1.31 x 20 = $26.20. That implies an increase in earnings of close to 20 percent, or $157.
What does that mean for stock prices? The S&P is currently trading at a multiple (PE ratio) of 17, high by historical standards. Applying that 17 multiple to earnings of $157, we get a price on the S&P 500 of roughly 2,669 for 2017.
That is 469 points or roughly 20 percent above where it is today.
How much the Trump tax cuts might help corporate profits https://t.co/1ARERRFEfC pic.twitter.com/c5qcoSguPO— Bob Pisani (@BobPisani) December 2, 2016