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MARKET RECAP *

  • Major US stock markets outperformed driven by the unexpected presidential election of Donald Trump
  • Bonds and international stocks exhibited negative returns
  • The S&P 500 increased by 3.7% on the month and is now up almost 10% year-to-date
    • Top Sectors: Financials (+13.7%), Industrials (+8.5%)
    • Bottom Sectors: Utilities (-6.0%), Consumer Staples (-4.5%)
  • The rise in Financials and the underperformance of Utilities are believed to be from expectations of higher interest rates, and less regulations under the Trump administration
  • Value outperformed Growth especially in small caps in November and YTD
    • 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 are the only equity asset class with a negative return YTD
    • The MSCI EAFE index is down -1.3%
  • Emerging markets declined almost 4% in November but are still up over 11% YTD outpacing the S&P 500
  • Long-term Treasuries drastically underperformed on the month (-7.65%) due to higher expectations of future rate hikes by the Federal Reserve, greater GDP growth, and increases inflation under a Trump administration
  • The Ten-Year Treasury yield rose sharply to 2.37% from 1.84%

 

ECONOMIC NEWS

  • The U.S economy added 178,000 jobs in November***
  • Unemployment decreased to 4.6%, well below the Fed’s definition of the “full employment” rate
  • The market’s consensus is 100% that the Federal Reserve will initiate a 0.25% rate hike at the December 14th meeting putting the Fed Funds rate at 0.5-0.75%**

11.16 chart

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