We closed out 2016 with two notable developments, both of which had significant impacts on the economy.
The first was the U.S. presidential election. After an outcome that surprised many, we saw a post-election bump in stock market prices. In a vacuum, that’s great news — but we think the stock market may have gotten a little ahead of itself. We have yet to see if and when the new administration’s proposed policies concerning lower corporate and personal taxes and less regulation get enacted. It could be six to 12 months before we see true economic traction.
The other big news from fourth quarter was the Federal Reserve’s decision to raise rates, and the related commentary indicating that we should expect more increases in 2017. Higher interest rates mean a stronger U.S. dollar, which is a negative for U.S. exports.
In a time of uncertainty, we remain cautiously optimistic. What are we doing with recent profit from the post-election bump? And what position are we taking in terms of our equity bond position? Watch the video below for more insight.
The opinions expressed are those of Rich Weiss and are no guarantee of the future performance of any American Century Investments portfolio. For educational use only. This information is not intended to serve as investment advice.