Quarterly Market Update and Investment Outlook, January 2017

U.S. equity markets surged following the election of Donald J. Trump as the forty-fifth President of the United States, with the S&P 500 rising 5 percent in the last seven weeks of the year. The Russell 2000 index of small cap stocks added more than 13 percent during the same period. Meanwhile, interest rates rose suddenly and dramatically post-election, leaving bond investors with one their worst four-week losses in decades. Financial markets were surprised by Mr. Trump's win. Market analysts had dissected the impact of a Hillary Clinton victory and fully baked her proposals into their market assumptions. Instead, Mr. Trump's unexpected victory forced financial markets to immediately revise their assumptions and recalibrate their valuation models. The question today is whether markets are now overestimating the positive impact of the election while simultaneously underestimating the potential for negative events which could swing markets to the downside. [click on the video below for more on the quarterly market update]