Market Digest \u2013 Week Ending 11\/18\/2016\r\n\r\nFor capital markets, the first full week after the election felt surprisingly normal. The S&P 500 finished the week up 0.8%, and didn\u2019t move more than 1% on a single day. Bonds fell for a second straight week, but not by as much. Ten year Treasury yields rose from 2.15% to 2.35%. Sector specific behavior was erratic. Financials outpaced the market for a second straight week, but tech rebounded from initial losses and healthcare lagged this week. International stocks once again fell and the dollar rose on a combination of optimism for President-Elect Trump\u2019s policies and increasing likelihood the Fed raises rates in December.\r\n\r\nWeekly Returns:\r\n\r\nS&P 500: 2,182 (+0.8%)\r\nFTSE All-World ex-US: (-1.2%)\r\nUS 10 Year Treasury Yield: 2.35% (+0.20%)\r\nGold: $1,207 (-1.5%)\r\nUSD\/EUR: $1.059 (-2.4%)\r\n\r\nMajor Events: \r\n\r\n\u2022 Monday \u2013 American Apparel filed for bankruptcy and agreed to sell its brand.\r\n\u2022 Tuesday \u2013 US retail sales rose 0.8% in October, which was ahead of expectations.\r\n\u2022 Thursday \u2013 US jobless claims fell to a seasonally adjusted 235,000 \u2013 the lowest since 1973.\r\n\u2022 Thursday \u2013 Fed Chairwoman Yellen said the economy is making good progress and that the Fed could raise rates \u201crelatively soon.\u201d The dollar rose.\r\n\u2022 Friday \u2013 President-Elect Donald Trump said he would appoint Jeff Sessions as attorney general and Mike Pompeo as director of the CIA.\r\n\r\nOur take:\r\n\r\nTwo weeks ago, very few would have predicted Donald Trump would win the election, stocks would be up, interest rates would be higher and the implied market odds of a Fed rate hike in December would be up to 83%. Yet here we are. The last few weeks have provided a textbook example of why timing the market is so difficult and so many fail at it. Even if you are correct about what will happen in the wider world, it is hard to make the right bets in the market to make it pay off.\r\n\r\nOne unexpected post-election outcome is that suddenly US stocks are leading all other major asset classes for 2016. This builds on the general trend in place since the start of the current bull market. Ignoring dividends, since the start of 2011, US stocks are up about 70% while international stocks are down 10%. This kind of separation isn\u2019t unusual. We\u2019ve seen longer and stronger in both directions and a 5-10 year leadership cycle is fairly typical.\r\n\r\nBased on fundamentals and a valuation mismatch, we believed there was a strong chance this was going to be the year US stocks gave up asset class leadership. And it still might be, but the market seems to want more people to abandon a global diversified approach before it rewards those who stick with it. We don\u2019t have a strong preference for what parts of the market lead or lag because we will stick with our long term allocations and periodically rebalance. Trump may or may not \u201cmake America great again,\u201d but there will be years US stocks lead and years other asset classes lead. It can be challenging, but we urge investors not to get frustrated with international assets and abandon them at what could be close to the worst time.