As the end of 2016 grows closer, we have to say that this has certainly been an eventful year. A long presidential election campaign left many Americans feeling bruised and more divided than ever, and many people were surprised when Donald Trump emerged as the victor. Similar to Brexit's unexpected win in June, election polling and conventional wisdom proved to be quite wrong once people actually voted.
In fact, just 15 days before the election, the Washington Post said, "Donald Trump's chances of winning are approaching zero." Statistician and writer Nate Silver - who correctly predicted winners in all 50 states and D.C. for the 2012 presidential election - called this year's results "the most shocking political development of my lifetime."
No matter how you feel about the election's outcome, we know that you may have many questions about what lies ahead. So, we'd like to provide deeper perspectives on what's happened since the election and what to consider in the coming months.
1. What We've Seen So Far
Noteworthy Market Growth
Despite many predictions that the markets would go down if Trump won, we've experienced a significant bounce since his election. As of this letter's writing, the S&P 500, Dow, and NASDAQ have all increased since November 8th. The Dow even closed at an all-time high on Thursday, November 10th, and posted its best week since 2011, despite being slightly down the next day.
Positive Economic Data
At the same time, we've also received a number of positive indicators about our economy. The Consumer Price Index has had its best three months since 2012; retail sales continue to show steady gains; new unemployment gains were at their lowest point since 1973; and housing starts rose a whopping 25.5% in October.
In other words, data continues to show us that the economy is growing and gaining strength.
2. What's On the Horizon
Potential Interest-Rate Increase
Now that the election is over, the Federal Reserve's December 13-14 meeting is the next big event that may affect market performance. Right now, the markets are indicating a 90% chance of the Fed raising interest rates in December. On November 17th, Fed Chairman Janet Yellen - who has proven hesitant to raise rates - told lawmakers that the increase could happen "relatively soon."
As we've mentioned before, an interest rate increase could cause some market volatility in the short term, but the Fed moving rates back to more normal levels is, fundamentally, a positive sign because it indicates that the economy is healthy enough to withstand them.
President-Elect Trump's Inauguration
Currently, the markets, media, politicians - and average Americans - are all looking for signs of what kind of president Donald Trump will actually be. We can look to his campaign promises and analyze his appointments, but no one can know for sure how he will serve until after he takes office January 20th.
The markets' rallies seem to show that investors expect increased infrastructure spending, plus decreases in three key areas: corporate tax rates, individual income taxes, and government regulation. But, as we've seen again and again in 2016, only time will tell.
In the meantime, we hope you will find confidence knowing that the economy shows many signs of sustained growth and fundamental strength. If you have any questions about how your strategy aligns with current circumstances, please feel free to contact us. Our country might feel divided right now, but we are by your side, no matter the political or economic climate.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named Broker dealer or Investment Advisor, and should not be construed as investment
advice. Neither the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.
Past performance of an index is not indicative of future performance. An index is unmanaged and cannot be invested directly into.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
Consumer Price Index (CPI) measures prices of a fixed basket of goods bought by a typical consumer, widely used as a cost-of-living benchmark, and uses January 1982 as the base year.
The Federal Reserve System (also known as the Federal Reserve and, informally, as the Fed) is the central banking system of the United States. The Federal Reserve System is composed of 12 regional Reserve banks which supervise state member banks. The Federal Reserve System controls the Federal Funds Rate (aka Fed Funds Rate), an important benchmark in financial markets used to influence the supply of money in the U.S. economy.