Weekly Market Commentary 12/01/2017

The Federal Reserve may be gradually taking away the punch bowl,
but the party on Wall Street shows no sign of ending. Indeed, stock
prices rocketed to new highs, even as Trump’s nominee for Fed Chair
Jerome Powell asserted at his Senate confirmation hearings this
week that the case for another rate hike in December is growing
stronger. Not even the disruptive political news on Friday could put
much of a dent in the bull market, shaving about 40 points off of
Thursday’s 332 point surge in the Dow Industrial Average. No doubt,
the greater likelihood that Congress will pass a tax bill, perhaps as
soon as next week, ignited the latest leg up in the rally. Whether
stock prices will track the “buy the rumor, sell on the news” trajectory
remains to be seen. But the markets are clearly pricing in a fiscal
bump that could deflate abruptly should the fate of the tax bill meet
an unexpected setback.