PERFORMANCE

It was a historic week as Trump pulled the upset. The overall US market was up 4.33% on the week, international markets were down slightly and bonds fell. The US dollar rallied.

The market was up on Tuesday in expectation of a Clinton victory. But around 9:00 p.m. when it started becoming obvious that Trump would likely win, the market went into a tailspin and fell about 5%. It hit its low at midnight, rallied back a little, and a good victory speech by Trump got the market moving north again. The market ended up slightly higher on the day and rallied to close the week.

The market rallied by concentrating on the positive impact of some of his proposals such as lower taxes, less regulation an infrastructure spending. For now, the market is ignoring the negative impact of his tough talk on trade and protectionism. They are hoping he modifies or backs off on that.

Bonds fell on the expectation that Trump will bring higher inflation and higher interest rates. Higher inflation and higher interest rates were probably on the way anyway, but the election might have accelerated the process. The interest rate on the 10-year note jumped by 36 basis points.