Market Update: Wednesday, December 21, 2016

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  • U.S. markets dip, follow Europe lower. Stocks are slightly lower in early trading, taking the lead from European shares, which are being dragged down by bank stocks in afternoon trading as investors focus on Italian banks’ woes. Major U.S. indexes finished in the green yesterday as the Dow notched its 17th record-high close since the U.S. election; now within 26 points of the 20,000 level. The S&P 500 gained 0.4%, led upward by the financials sector (+1.1%). Overnight in Asia, major indexes were mixed with the Nikkei losing 0.3%, whereas the China’s Shanghai Composite advanced 1.1% despite liquidity concerns heading into the final trading days of the year; the STOXX Europe 600 is down 0.3%. Both WTI crude oil ($53.65/barrel) and COMEX gold ($1,136/oz.) are up modestly as the dollar pulls back from a 14-year high, and the yield on the 10-year Treasury is unchanged at 2.56%.

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  • Dow 20,000. The Dow came within 13 points of hitting 20,000 yesterday and eventually closed 26 points below. The media continues to focus on this, and although it is nothing more than a random number, big milestones are a chance to reflect how far we’ve come and how strong this nearly eight-year-old bull market has been. If the Dow can close above 20,000 today, it would have taken only 20 days to go from 19,000 to 20,000–breaking the old record of 24 days from 10,000 to 11,000. We are aware as the Dow goes higher the percentage between one-thousand-point intervals is smaller; this is still a very interesting development.
  • Checking in on the Trump Rally. The current rally has been dubbed the Trump Rally and for the sake of argument, we’ll call it that. After 29 trading days since the U.S. election, the Dow has been higher 23 days and gained 9.0%. Going back to 1900, only the 29 days after Calvin Coolidge was elected in 1924 saw a better return, up 9.2%. The last time the Dow was green more times out of 29 days than the current streak was 24 out of 29 days in April and May 2007.

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Wednesday

Existing Home Sales (Nov)

Thursday

Leading Indicators (Nov)

Durable Goods Orders and Shipments (Nov)

Russia: President Putin Holds His Annual Press Conference in Moscow

Friday

New Home Sales (Nov)

Click Here for our detailed Weekly Economic Calendar

Important Disclosures

Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Stock investing involves risk including loss of principal.

A money market investment is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money markets have traditionally sought to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, political risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Treasury Inflation-Protected Securities (TIPS) are subject to interest rate risk and opportunity risk. If interest rates rise, the value of your bond on the secondary market will likely fall. In periods of no or low inflation, other investments, including other Treasury bonds, may perform better.

Bank loans are loans issued by below investment-grade companies for short-term funding purposes with higher yield than short-term debt and involve risk.

Because of its narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

Investing in foreign and emerging markets debt securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical and regulatory risk, and risk associated with varying settlement standards.

High-yield/junk bonds are not investment-grade securities, involve substantial risks, and generally should be part of the diversified portfolio of sophisticated investors.

Municipal bonds are subject to availability, price, and to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rate rise. Interest income may be subject to the alternative minimum tax. Federally tax-free but other state and local taxes may apply.

Investing in real estate/REITs involves special risks such as potential illiquidity and may not be suitable for all investors. There is no assurance that the investment objectives of this program will be attained.

Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

Technical Analysis is a methodology for evaluating securities based on statistics generated by market activity, such as past prices, volume and momentum, and is not intended to be used as the sole mechanism for trading decisions. Technical analysts do not attempt to measure a security’s intrinsic value, but instead use charts and other tools to identify patterns and trends. Technical analysis carries inherent risk, chief amongst which is that past performance is not indicative of future results. Technical Analysis should be used in conjunction with Fundamental Analysis within the decision making process and shall include but not be limited to the following considerations: investment thesis, suitability, expected time horizon, and operational factors, such as trading costs are examples.

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