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Recap | Week Ahead | Post Election Thumbnail

Recap | Week Ahead | Post Election

“A goal without a plan is just a wish.” - Antoine de Saint-Exupery 


Last week's market recap 

  • The S&P 500 closed the week up 4.69%. Year-to-date the index is up 27.17%
  • NASDAQ closed the week up 5.76%. YTD the index is up 29.25%
  • U.S. Aggregate Bond index closed the week up .78%.  YTD the index is up 2.10%
  • 10-Year Treasury Rate decreased, ending the week at 4.30% down from 4.37% the prior week
    • Fed Funds Target rate was cut .25% to 4.50-4.75%
  • The 1-Year Treasury is yielding 4.31%  
  • A 6 Month Treasury is yielding 4.45%  

 

The week ahead:  

  • CPI Inflation
  • Retail Sales
  • Earnings: Home Depot, Disney, Cisco, and more

 

Market Recap: 

U.S. stocks soared last week.  Small Caps and banks led the way following Trump’s victory.  Pro-growth, deregulation, and potential lower taxes were in focus.  Potential tariffs and rising deficits are not in focus at the moment.

 

Post-Election Comments: 

DO NOT PLAY POLITICS WITH YOUR PORTFOLIO.  For some investors, rebalancing slightly and/or repositioning may make sense. Bear in mind…U.S. Companies should be able to successfully adapt to new policies as they have in the past.  

The economic outlook looks stable. Major economic trends that were in place before the election are likely to continue.

  • GDP Growth is above trend
  • We’re at full employment (October unemployment rate was 4.1% below the long term average)
  • Low Inflation (year over year is 2.4%)
  • Consumer spending remains strong 

This economic environment is favorable for equity markets. Interest rates are declining. Secular trends continue to encourage corporate investment.  

The effects of the new administration’s policies shouldn’t be apparent for a while, so most investors should remain focused on the fundamentals. At the moment, the fundamentals are strong.   A well-diversified portfolio should participate in the longer-term uptrend, but also help as a defense against potential surprises.

 

Source: JP Morgan: Chart or the Week


 

Additional Comment: 


Elon Musk Tax Break?

  • IF Musk takes a senior position in Washington, he could be forced to sell some of his positions in Tesla and SpaceX.  Section 1043 of the America’s tax code would allow him to defer all capital gains on this divestment.  This means, he could potentially receive a tax break worth tens of billions. Thoughts?


As always, let us know if you have any questions.

 

Best, 

CRA Investment Committee


Matt Reynolds CPA, CFP®

Tom Reynolds, CPA 

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP® 

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP® 

Phillip Tompkins, CFP®


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