Weighing the Week Ahead: Time for a Portfolio “Transition?”

There is some important data on the schedule for this week, along with earnings and the expected doses of FedSpeak. None of that will attract much attention. Instead expect “all Trump, all the time”. The slant in financial media will be the implications for investors. As we get news of the leadership transition, I expect the punditry to be asking:

Do investment portfolios need a transition?

Last Week

Last week’s economic news was all good, but less important than the election.

Theme Recap

In my last WTWA, I predicted a focus on the election and the chances for greater economic and financial clarity. The election expectation was obvious, and there was indeed a focus on the implications for investors. That said, I embraced the consensus expectations which proved to be dramatically incorrect. I did correctly note that the crystal ball would remain cloudy, but that proved to be quite an understatement.

The Story in One Chart

I always start my personal review of the week by looking at this great chart from Doug Short. He captures the post-election rally as well as the Friday fizzling.

Doug has a special knack for pulling together all the relevant information. His charts save more than a thousand words! Read his entire post where he adds analysis grounded in data and several more charts providing long-term perspective. Here is one additional example.

The big story of the trading week does not show up in the stock market data. As the Trump victory became apparent, overnight trading in stock futures showed a massive decline. This chart shows the selling and the morning rebound.

The News

Each week I break down events into good and bad. Often there is an “ugly” and on rare occasion something very positive. My working definition of “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

This week’s news was quite good. If I missed something for the “bad” list, please feel free to suggest it in the comments.