We did it. We all survived a seemingly endless election cycle. In our post on the day after the election (revisit it here if you missed it), we outlined our belief regarding the likely impact of President elect Trump's victory on the markets and our country.
Since that time, equity markets have exceeded our expectations. As you will see in the chart below, equity markets have performed very well. On the other hand, as interest rates have begun to rise, fixed income has sold off.
What's causing these moves? It's always hard to know, but our educated assumption is that it is the markets are reacting to certainty, an all-republican government (which is typically pro-business), a "America first" message from Trump, and belief of lower regulation lies ahead for key sectors like financials. Another factor that we find interesting is that there is (finally) a lot of new cash entering the markets. For years, there has been a material amount of cash on the sidelines, and it seems that with the election behind us, some of that cash is being deployed into the markets. As demand rises, so do prices.
We've been pleased with market returns for 2016 and appreciate your ongoing business and confidence. Invest on!