Market Digest \u2013 Week Ending 11\/9\r\n\r\nUS elections passed with little surprise, so investors focused their attention back to Europe and the Fiscal Cliff. They didn\u2019t like what they saw, even though little had changed from a week ago. For the three days following the election, the S&P 500 was down 3.4%. Gold and Treasuries rose, likely because the Obama victory leaves the door open for the Fed to continue Bernanke\u2019s aggressively bond purchases.\r\n\r\nWeekly Returns\r\n\r\nS&P 500: 1,380 (-2.4%)\r\n\r\nMSCI EAFE: (-1.6%)\r\n\r\nUS 10 Year Treasury Yield: 1.61% (-0.11%)\r\n\r\nGold: $1,731 (+3.2%)\r\n\r\nUSD\/EUR: $1.271 (-0.9%)\r\n\r\nMajor Events\r\n\r\n \tMonday \u2013 Netflix announced it adopted a poison pill following Carl Icahn\u2019s disclosure that he had acquired nearly 10% of the company. The action allows existing shareholders to acquire more shares.\r\n \tTuesday \u2013 The people of the United States of America elected Barack Obama for another term as President. Republicans retained control of the House, while Democrats added to their majority in the Senate.\r\n \tWednesday \u2013 The European Commission lowered its 2013 growth forecast for the Eurozone from 1% to 0.1%.\r\n \tThursday \u2013 Groupon reported third quarter revenue that missed estimates, sending shares down 24% in after-hours trading. The stock is now down approximately 90% from its first day of trading one year ago.\r\n \tFriday \u2013 The Thomson Reuters\/University of Michigan\u2019s preliminary index of consumer sentiment for November increased to 84.9 from 82.6 the prior month, ahead of expectations.\r\n \tFriday - President Obama called on Congress Friday to immediately freeze tax rates for most Americans and said he was inviting top lawmakers to the White House next week to discuss how to avoid the year-end fiscal cliff and invigorate a still weak economy.\r\n\r\nOur Take\r\n\r\nThe election unfolded pretty much as we expected. As such, we were surprised to see the sharp sell-off in equities on Wednesday. For those who like to keep track of such things, the 2.4% drop in the S&P was the 5th largest post-election decline. President Obama failed to break his own dubious record from 2008, when the market fell 5.1% after his defeat of John McCain.\r\n\r\nThe media focused on the Fiscal Cliff, but nothing materially changed in this matter from Tuesday to Wednesday. Our view remains that taxes will go up on January 1st, and some type of compromise will be reached early in 2013. If so, there will be a real impact to the economy, but we expect it to be modest and likely overshadowed by the continuing improvements in the housing market. But there is also risk we are wrong and no compromise is reached\u2013this would be bearish.\r\n\r\nMost Americans, us included, tend to overestimate the impact of US politics on the global economy. Most of this week\u2019s losses may actually be attributable to yet another looming round of the Greece debacle. European leaders and the ECB are bickering about who should support Greece. No one wants to shoulder the burden as it is likely the equivalent of throwing money into a black hole. If Greece is eventually forced out of the Eurozone, as we predict, it will cause ripples. However, this possibility is so well known and anticipated that we don\u2019t expect it to have much long-term impact on major stock indexes.