By Jennifer Coogan
NEW YORK (Reuters) - As the Democrats get set to take control of Congress in January, big money managers are taking the imminent power shift in stride, convinced that market-friendly policies of the Bush era will remain intact.
Money managers who participated in the Reuters Investment Outlook Summit in New York this week said it was unlikely that the new Congress would roll back the Bush administration's tax reform on dividend and capital gains income, a policy that has helped lift stocks.
One reason, they said, was that any rollback would prove politically unpopular for the new majority party.
"I don't expect as much in changed policies from Democrats. If you look at which candidates the Democrats ran to get the swing vote, they're liable to turn Republican if the party moves too far to the left," Reiner Triltsch, managing director at U.S. Trust, who forecasts international equities will outperform domestic stocks in 2007.
Bush's tax cuts capped the levy on capital gains and dividend income to 15 percent. The tax breaks are set to expire in 2010.
Reversing the reforms "is certainly a risk and would have a marginal effects on the market, but to be honest, I don't think the tax reform has had that much impact on market valuation levels," said Bob Morris, chief investment officer at Lord Abbett.
"I would worry about that, but let me ask, you want get re-elected in 2008, how many risks are you going to take with reversing tax policy?"
POTENTIAL MARKET GAINS Continued...
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| Paper | Aug 20 - 21, 2008 | Manufacturing |
| Japan Investment | Jul 01 - 2, 2008 | Country Summits |
| Global Real Estate | Jun 23 - 25, 2008 | Real Estate |
| Consumer and Retail | Jun 16 - 18, 2008 | Consumer Retail |
| Investment Outlook | Jun 09 - 12, 2008 | Financial Services / Exchanges |
