Tag Archives: Election

Market Perspectives and Outlook

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.

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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.

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The Election is Over. Now What?

The general election is over and the people have spoken.  Donald Trump will be the 45th President of the United States.

The run-up to November 8th has shown that our country is sharply divided politically.  Some people will be happy and others disappointed by the result.  However, it’s important to avoid letting your personal political beliefs and emotions cloud your long-term investment decisions.

Our job as your financial advisor is to help you navigate your way through the upcoming economic and political changes.  Forecasters can be wrong, and we have seen that pollsters can be too.  We avoid making big bets based on crystal ball gazing.  So how do we see the future?

As students of history we think that countries that keep their governments relatively small, in terms of spending, regulation, and tax rates, will provide their residents with an advantage in pursuing financial prosperity.  Regardless of who won this year’s election, we think that economic growth in the U.S. will generally continue, even with the policy mistakes the winner may make.

Since 2009, we have experienced what we’ve been referring to as a “Plow Horse Economy.”  That means that the macro-economy has gradually recovered even as many people have not seen much of an improvement in their individual economic lives.  The overall economy has grown despite the fact that debt, regulation and political turmoil have acted as a “Plow” holding the economy back.  Despite this drag, the major U.S. stock indexes are up almost 50% over the past four years.

We remain constructive on the economy and the markets.  With the election in the rear view mirror, we expect the Federal Reserve to begin its long, slow walk to raising interest rates from today’s near-zero percent.  We expect those moves to be very gradual and to have little long-term effect on the market.

One other statistic makes us optimistic for the future.  Consumer spending is said to account for 70% of the U.S. economy.  Unfortunately, that vast middle class that we think of as the “average consumer” has not seen much in the way of a fatter wallet over the last few decades.  That was one reason for the popularity of Trump’s message to the middle class that he would restore good paying middle class jobs.  We believe that if he is able to follow through on this promise, a resurgence of earnings growth by the middle class will be a positive for the American economy, and hope that he is able to implement feasible policies to promote such growth.

 

 

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