In the last full trading week of 2016, domestic markets were relatively quiet, with many people out of the office for the holidays. Nonetheless, alimgres-2l three major domestic indexes ended the week in positive territory.

In the last full trading week of 2016, domestic markets were relatively quiet, with many people out of the office for the holidays. Nonetheless, all three major domestic indexes ended the week in positive territory.

In the last full trading week of 2016, domestic markets were relatively quiet, with many people out of the office for the holidays. Nonetheless, all three major domestic indexes ended the week in positive territory.

The S&P 500 was up 0.25%, the Dow gained 0.46%, and the NASDAQ added 0.47%. International equities in the MSCI EAFE were also up, increasing by 0.36%.

The Dow continued to flirt with surpassing the 20,000 mark for the first time – reaching within fewer than 13 points at its highest trading point on Wednesday, December 20 – before closing at 19,933.81 for the week. Today, the Dow closed 55 points shy of 20,000.
Outside of the markets, we received a number of reports that painted a mostly positive view of the U.S. economy.
Good News
  • GDP revised up again: For its final report on economic growth in the third quarter, the Commerce Department adjusted the GDP up for the second time – to a 3.5% annual rate. This analysis shows the fastest economic growth in two years.
  • Consumer sentiment hits nearly 13-year high: The monthly index measuring consumers’ views on the current and future state of the economy increased by 4.7 points to reach 98.2 for December. This reading is the highest since January 2004.
  • New home sales beat expectations: Economists predicted that new home sales for November would increase by 2.1%, but last week’s data showed the increase was in fact 5.2%. Consumers anticipating higher interest rates in the future could be contributing to the expectation-beating results.
  • Today, International Equities regained a top 2 spot on the Asset Scale. This is the first time that International Equities have enjoyed a top 2 spot since July 2015, some 17+ months ago. With the two “risk-on” asset classes now in the the #1 and #2 spots on the Asset Scale, we will find ourselves over-weighted in these assets classes shortly.
    Asset Scale as of 12/27/2016

    Asset Scale as of 12/27/2016

     

Mixed News
  • Personal incomes stayed flat: Despite economists’ predictions that personal incomes would increase by 0.3% in November, the Bureau of Economic Analysis’ data showed them flatten. Even with last month’s stagnation, personal incomes are up 3.5% for the year.
  • Durable goods orders declined: After increasing by 4.8% in October, durable goods orders dropped by 4.6% in November – due largely to a 73.5% decrease in civilian aircraft orders. While no one likes to see a decrease, the report had several positive highlights, including an unexpectedly high increase in orders for U.S.-made capital goods.
Overall, even though last week was fairly slow for trading, we continue to see signs that the economy is improving – even if it is still far from perfect. On the heels of a lengthy annual 2016 Investment Summit and further research, we have implemented and will be implementing more model and allocation changes to reflect the post election economy we find ourselves in.  These changes and the move of International to a top 2 spot, makes 2017 seem quite rosy. We look forward to discovering what 2017 holds for investors and hope for more record highs and an economy that picks up speed as time goes on.
Want more info on Investment Summit 2016? Let’s meet in January and discuss what changes apply to your portfolio.
Thank you again for another year. Your trust, confidence and patience in these trying markets rife with media noise and an aggressive risk-reward environment. Fingers crossed that what we see for 2017 will reward you!

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