Market Commentary, 11/30/16

The upward market movement since the election, known as the Trump Rally, continues despite today’s relatively flat close of 19,124 for the Dow and 2,199 for the S&P 500. Before today, the Dow closed at record highs 8 of the 14 trading days since the election.

Dow Jones Industrial Average Record Closing Highs Since November 8 Election
Date 10-Nov 11-Nov 14-Nov 17-Nov 21-Nov 22-Nov 21-Nov 25-Nov
Close 18,808 18,848 18,869 18,904 18,957 19,023 19,082 19,147

 

Strong Dollar: This market run-up has also driven a breakout in US currency, which has reached the highest level since April, 2003. The result is a boom to the domestic economy and a “strong dollar” that is widely viewed as good. In fact, some people even consider it patriotic.

It should be noted that a strong dollar can have negative results, including potential housing troubles due to higher mortgage rates. Also its more expensive for buyers in foreign countries, who usually spend their own currency, to buy US made goods priced in dollars. Companies that sell goods and services overseas are already complaining about the strong dollar. Some of the bigger names include: Whirlpool, Kraft Heinz, Apple, and Alexion Pharmaceuticals. A strong dollar versus the Mexican peso will likely result in more illegal entry tries, as the reward is much greater than the potential consequence, making it even harder to police the border.

The Fed: There was speculation that a Trump election win would slow the economy, effectively derailing a Fed rate increase. However, according to Federal Reserve Governor Jerome Powell, “The case for a rate hike has clearly strengthened since the US central bank’s last meeting.” As of now, it is widely expected that the Fed will raise interest rates after the December 13-14 meeting. According to the CME’s FedWatch tool there is a 96.3 percent probability of a rate hike before the end of the year.

Summary: An interest rate increase could be considered a step towards removing, or at least reducing, artificial stock market drivers. As Wayne mentioned last week, we may see significant volatility and a potential stock market pull back over the next several months following Trump’s inauguration, but the long term market projection is positive.

Regards,

Jeremiah Patterson, CFP®
Copelin Financial Advisors
514 Brooks Street
Sugar Land, TX 77478
Phone: 281 240-2902
Fax: 281 240-2856
jeremiah@copelinfinancial.com

Securities offered through ProEquities, Inc., a Registered Broker-Dealer and Member FINRA & SIPC Advisory Services offered through Harvest Investment Services, LLC., a Registered Investment Advisor Copelin Financial Advisors, Inc and Harvest Investment Services, LLC are independent of ProEquities, Inc.

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