In 2016, the general election dominated the news headlines while the economy continued its slow slog for most of the year.
Stocks began the year in a slump, losing 10% in the first six weeks and then meandering sideways until July. The markets rallied in the third quarter, followed by another decline until the election. That’s when Trump’s surprising win started a rally that has carried the market to nearly 20,000 on the Dow.
U.S. equities have held their gains since the election, while definitive sector rotations indicate more confidence among investors. We believe the bull market will continue, although the sharp gains seen recently may give way to more sideways movement and/or potential pullbacks.
Improving economic data alongside a perception that the incoming Trump administration will be more business-friendly has bolstered both stock and Treasury yields.
The Federal Reserve raised interest rates in December and indicated that they expect further rate increases in 2017.
While it remains to be seen how much of Trump’s populist agenda will be embraced by the Republican Congress, a survey of 177 fund managers the week following the elections found they were putting cash to work at the fastest pace since August 2009.
We always want to be good stewards of our client assets. As such, we are participating in the market’s growth while at the same time remaining aware that the future holds many uncertainties, especially with the change in government direction and policy as we head into 2017.
As always, we value our relationship with you and welcome your comments and suggestions.