Jan. 1, 2018

2017 was the year markets finally saw the financial crisis come to an end, a decade after its initial onset. The Federal Reserve raised interest rates three times and began to wind down its crisis-era program of asset purchases.

Meanwhile the labor market continued to grow with the unemployment rate now sitting at a 17-year low of 4.1%. Consumer and business confidence are at cycle highs. With this background, Congress has approved a huge tax cut. 2017 was clearly the year that something changed in the U.S. economy, in the psychology of the U.S. consumer and the investor class. It was the year that folks went from being scared that the next crisis was right around the corner to accepting the current economic expansion. We have seen a boost in consumer and business confidence that has sent stocks to record highs, and pushed the investor community to finally move on from the financial crisis.

Barring any cataclysmic event, Wall Street expects that 2018 will look a lot like 2017 — stock gains should be solid, albeit muted from 2017, with economic growth continuing. The Federal Reserve is expected to raise interest rates another three times in 2018, shifting its policy stance from normalizing interest rates to a tightening policy. Of course, there will eventually be another economic slowdown, with the flattening yield curve. This is likely to be a major market story in 2018.

In the meantime, we wish you a healthy and prosperous 2018!

For the year the Dow was up 25.08 percent; the S&P 500 and NASDAQ were both ahead 19.42 and 28.24 percent, respectively. The 10 year Treasury is currently yielding 2.43 percent.