Weekly Market Commentary 12/15/2017

The financial markets spent an eventful week digesting news on the political, policy and economic fronts. While there was little market reaction to the upset result in Alabama’s Senatorial race, the loss of a Republican seat narrows the party’s majority in the chamber to a slim one vote, which could complicate the Republican legislative agenda going forward. The next significant item, for example, will be passing a spending bill to fund the government in 2018. Congress will probably approve another short-term measure to carry it through early January but after that the Republican’s leverage is diluted by the addition of a Democrat in the Senate. Simply put, a government shutdown that would clearly stoke market volatility is more than a nontrivial prospect.