Market Digest \u2013 Week Ending 1\/13\/2017\r\n\r\nCapital markets were calm this week. U.S. stocks and bonds both finished relatively flat. A lack of details on spending plans in a press conference from Trump led to a modest retreat in the dollar and propelled international stocks to outperform for the week. Major banks began reporting earnings which were generally ahead of expectations.\r\n\r\nWeekly Returns:\r\nS&P 500: 2,275 (-0.1%)\r\nFTSE All-World ex-US: (+1.1%)\r\nUS 10 Year Treasury Yield: 2.40% (-0.02%)\r\nGold: $1,197 (+2.0%)\r\nUSD\/EUR: $1.064 (+1.0%)\r\n\r\nMajor Events: \r\n\r\n \tMonday \u2013 Jobs growth in December was below expectations, but wage growth of 2.9% was the highest since 2009.\r\n \tTuesday \u2013 The Fed sent $92 billion to the US Treasury in 2016, below last year\u2019s record high.\r\n \tWednesday \u2013 Bill Gross said a sustained move of the 10 Year Treasury yield above 2.6% would signal the end of the 30 year bull market in bonds.\r\n \tThursday \u2013 Tesla revealed pricing for its super charging stations which will cost roughly $15 for a drive from San Francisco to Los Angeles.\r\n \tFriday - The House took the first procedural steps to ending the Affordable Care Act.\r\n \tFriday \u2013 JP Morgan and Bank of America reported higher than expected earnings and Wells Fargo reported a drop, but it was not as bad as feared and the stock rose.\r\n\r\nOur take:\r\nIn 2016, international stocks (especially emerging markets), were leading U.S. stocks up until the surprise election of Donald Trump. This reversed quickly as investors quickly refocused on hopes for Trump\u2019s proposed spending plans and America First policies. International stocks ended Q4 negative while U.S. stocks continued to rise.\r\n\r\nWe\u2019re only two weeks into 2017, but international stocks are off to a better start so far, up about 3.5% compared to 1.5% for the S&P 500. There were a lot of knee-jerk reactions in the wake of the election but in another week we will start to see what really happens with Trump in the White House. There is a good chance some of the initial moves will see some reversion to the mean.\r\n\r\nInternational stocks are cheaper than U.S. stocks on a price to earnings ratio and the dollar is now expensive on a purchasing power basis compared to most major currencies. We strongly believe international stocks should be at least 25% of most US investor portfolios.