“Same old story, same old song, Goes all right till it goes all wrong…Same old story, same old song”  — B.B. King

In terms of political market drivers, there is a lot that might be described as the “same old story” right now. I wrote in June here about presidential politics and their historical relationship to US stock market movements. In that post I explained that typically US stocks do very well in an election year. Optimism about the new president push sentiment in a pretty positive direction.

I think it is safe to say right now, there sentiment is on the rise post-election and that rising sentiment has been moving markets. US stocks ended 2016 in double digits with the SPY returning +11.2%, and ~2.5% of that return coming post election.

World stocks ended 2016 +5.99% as judged by the Vanguard World Stock ETF (VT).

The optimism and historical trend for election years played out in 2016. Will the dissatisfaction of inaugural years play out in 2017 for US stocks?

If 2017 sees a sentiment driven decline in US stocks it will be “the same old story, same old song” that we’ve seen before.

                                                                                                            – Wyatt Swartz

 

Written 1/8/2017