In addition to rounding up the week’s important issues in the financial markets, we’ve also added brief thoughts on what effects on wealth and investment management you should watch for, which we’ll continue to highlight each week.

Market Action:

For those troglodytes reading this email, the biggest story of the week is Donald Trump’s victory in the U.S. Presidential election. His election initially sparked dramatic risk-off trades overnight and major foreign exchange movements, but since Wednesday morning, calm has prevailed as global stocks rallied and flight-to-quality trades have been unwound. The general risk-on dynamic stemmed from expectations of fiscal stimulus and easing regulation as Trump tries to unify the body politic going forward. Treasuries still saw a massive selloff dwarfing market reaction to Brexit.

Rallying equities and dropping Treasuries have sent a bullish economic message about the start of the Trump term. Investors can expect lower taxes, easier regulation, and increased infrastructure spending to be on the agenda early in the new year, all of which tend to be supportive to growth. The open questions have to do with the uncertain path of Trump’s priorities, his promise of an overhaul of NAFTA, and a potential slowing in high-skilled immigration. The Federal Reserve still looks likely to hike by year-end with the incoming administration perhaps even pushing for hikes, and Janet Yellen seems likely to serve out the remainder of her term to February 2018 though not to be re-nominated. The U.S. economy also went into the election showing signs of health like better-than-expected initial jobless claims this week, higher corporate earnings, bullish commentary from retail executives on the holiday season, and a narrowing trade deficit. But for those worried about the deleterious impact of that certain politicians may have, there may be less that those politicians can do to derail economies than widely thought according to the Secretary-General of the OECD.

While the U.S. seems tentatively positioned for growth, the outlook for the rest of the world looks bleaker, and not even as a consequence of Trump’s election. Oil prices look likely to remain depressed both short-term and long-term: the current surplus will likely extend well in 2017, and OPEC now forecasts global peak oil as only thirteen years away, after which demand will fall secularly. The European Commission also dropped growth forecasts in light of rising uncertainty and de-globalization. China set a more adversarial course against the West in replacing its pro-reform finance minister in a surprise reshuffling and in cracking down on Hong Kong, but in fairness, Trump has called for damagingly-high tariffs that would seriously impact China. Still, the dynamic does not look poised to foster commerce.

What to Watch:

A House Undivided,

The Polly Portfolio Team