Weekly Market Update (Week Ending January 13th, 2017) - Peak Trump?
Weekly Market Update (Week Ending January 13th, 2017)
Peak Trump?
Markets were somewhat quiet this week, as volatility remains quite low on Wall Street. The S&P 500 was essentially unchanged while the Dow Jones Industrial Average fell slightly. The Global MSCI ACWI was able to close up around 0.5% as the dollar retreated a little this week. Emerging markets reacted favorably to a down dollar gaining 2%. Emerging markets remain an interesting long-term investment in my opinion; though there will certainly be setbacks along the way. Gold managed to bounce 2% to the upside on that dollar weakness. Even the 10-Year Treasury was quiet, as the yield fell 2 basis points from 2.42% to 2.40%.
The S&P 500 is basically unchanged over the last month as some of the euphoria has worn off since the election. I think the only thing that is certain moving forward, is that there will be a lot of uncertainty with a Trump Presidency. Markets usually don't like uncertainty, so I'd caution investors that the recent lull in volatility might not be with us much longer. With that being said, volatility creates opportunity, it just doesn't feel good.
Earnings season began last week and Trump takes office this week. I think there has already been a significant amount of positioning based on some of the policies Trump has "Trumpeted". Therefore, earnings should matter to an extent, or better yet, forward guidance during earnings calls should matter more.
As we position portfolios for the future, it is easy to get caught up in the short-term news cycle. I even write a weekly update, and a weekly timeframe is nothing in the grand scheme of things. However, I do believe we are at some sort of inflection point. The world has been going through a monetary experiment (low rates and central bank intervention) for quite some time now. The question I ask myself daily is what is the upside if the world is able to transition smoothly out of this experiment vs. what is the downside if it can't? After all, we work in probabilities not certainties. We work in a world of risk vs. reward. Regarding the question I've been asking myself, how asymmetrical could the outcome be?
Michael J. Basile, CFA
Chief Investment Officer | Principal
Matune Basile Advisors
295 N. Kerrwood Dr. | Suite 102 | Hermitage, Pa 16148
[email protected] | 724.977.6275