Surprising many investors and pundits alike, the S&P 500 posted a solid return for 2016, finishing the year up close to 10%. If investors never looked at their statements, one might be naïve to how much markets zigged and zagged throughout the year.
Fed Chair Janet Yellen will present her monetary policy testimony to Congress on Tuesday and Wednesday. We may not learn much new regarding the pace of future rate increases (which will remain data-dependent) and she’s certain to avoid getting into any discussion of fiscal policy.
As passive investing has become increasingly popular, the number of indices that track stocks has exploded. More portfolios are being built to track a wider range of exotic indices. But do investors really know what they’re getting?
January economic data are relatively unreliable, but recent figures paint a fairly consistent picture of where we are headed in the near term. While there is reason to be optimistic, it’s still a mixed bag, with some concerns about what we’ll see coming out of Washington over the next several months.
Real GDP rose at a 1.9% annual rate in the initial estimate for 4Q16, with the headline growth figure held down by a wider trade deficit. That does not mean that foreign trade is a drag on the U.S. economy.
It goes without saying that there is a sharp contrast between the economic views of the incoming administration and those of the Federal Reserve. President Trump, and most of the individuals who voted for him, sees a weak economy, devastated by job losses in manufacturing. The Federal Reserve sees an economy nearing full employment. So who’s correct?
Since the November election, the financial markets have priced in a more friendly business environment, with growth boosted by expansionary fiscal policy. However, the White House does not have absolute power.
Longer-term bond yields are near their highs for this cycle, while the environment for riskier assets like high-yield bonds, bank loans and stocks remains positive.
Based on the little substance that emanated from the presidential campaign, it is almost impossible to game the precise market and economic policy implications of a Trump presidency. What there is to guess at suggests possible gains for the financial sector, companies leveraged to infrastructure, and healthcare companies, should there be dramatic reform to the Affordable Care Act.
The December Employment Report showed the job market to be in good shape. The pace of job growth slowed in 2016, partly reflecting tighter labor market conditions.