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MARKET RECAP *

  • Major U.S equity markets continued the “Trump rally” in December, leading to positive gains across all asset
    classes in 2016
  • The S&P 500 increased by 12% on the year, making it the best performing asset class in 2016
    •  Top Sectors: Energy (+23.6%), Financials (+20.1%)
    • Bottom Sectors: Healthcare (‐4.3%), Consumer Staples (+2.5%)
  • The rise in Energy was the result of improvement in oil prices and an OPEC agreement to cut oil production,
    while Financials increased on the hopes of higher interest rates and deregulation policies from the incoming
    Trump administration.
  • Value outperformed Growth across all market capitalizations on the year, a reversal from 2015
    • This is believed to be due to Trump’s promises of higher fiscal stimulus, lower corporate taxes, and less
      regulations which tends to benefit value stocks more than growth stocks
  • International developed countries like UK and Japan increased by 2.7% on the month
    • This allowed the MSCI EAFE index to exhibit a slightly positive gain for 2016
  • Emerging markets declined slightly in December due to continued concerns about potential Trump
    administration trade and immigration policies

    • However, the MSCI Emerging Market index ended up almost 11% on the year
  • Long‐term Treasuries were the worst performing asset class on the month (‐0.46%) and the year (+1.18%)
    • This occurred as the ten‐year Treasury yield rose to 2.45% from 2.24% in 2016

ECONOMIC NEWS

  • The U.S. economy added 156,000 jobs in December, slightly lower than expectations, but this marked the 75th
    straight month of job creation***
  • At their December meeting, the Fed initiated the first and only rate hike of the year, raising the Federal Funds
    rate by 0.25% to the 0.50‐0.75% range.

    •  The Fed now expects they will raise rates three times in 2017 to the 1.25‐1.50% range. ***

 

Asset Performance 12/31/2016**
1.10 Market Recap

*Merrill Lynch **Bloomberg***Wall Street Journal****Source: Performance of respective ETFs*****Charts are shown for illustrative purposes only