PERFORMANCE

It was back to the races as equity markets around the world shot higher. US markets were up 3.39% and international was up 3.15%. Bonds fell again, down 0.17%. The dollar was up and oil was down.

It feels like a mad dash higher, and the sentiment is that this will continue at least through year end. The Dow, closed at 19,756, and investors consider it a given that it will hit 20,000 any day.  A lot of the Dow advance is powered by Goldman Sachs (GS). The Dow is weighted by price per share so Goldman, at $241 per share, accounts for 8.4% of the Dow. GS has rallied 32% since the election resulting in a gain of 408 points.  By contract, the next biggest contributor since the election is UnitedHealth (UNH) with 103 points.

Optimism is extremely high. CNN measures sentiment through their Fear & Greed Index and the most recent reading is “extreme greed.” This compares to one month ago, when the gauge was marked “fear.”

The Volatility Index (VIX) closed at 11.75. That is a very low reading. The last time the VIX went below 12 was for a few days between September 2 and September 7 when the SPY was about $219. That turned out to be a high and the market then sold off to $208.55 through the election.

Treasury rates were up during the week. But in a change, the long-end of the curve increased less than the short-end.

ECONOMY

For the second straight week, the Atlanta Fed’s GDPNow model for Q4 growth declined, falling to 2.6%. Two weeks ago, growth was forecast at 3.6%, so there has been a big drop in just two weeks. A lower estimate on the contribution from inventory investment accounted for much of the change. The NY Fed’s Nowcast remained steady at 2.7%.

More signs that the Trump win is increasing confidence, the Duke University/CFO Magazine Business Outlook Survey hit its highest level since the first quarter of 2007. CFOs cited regulatory and corporate tax reform for the improved optimism.

Initial jobless claims fell to 258k.

Healthcare has been a big drag on the economy for years and it is only getting worse. The video below summarizes the negative impact on the US economy.

Click here for video of healthcare of US economy.