Scattered Clouds but No Rain on This Parade

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The elections are over and the market did indeed breathe a big sigh of relief. The outcome resulted in a split Congress which is thought to be good for markets because major legislation, with the potential to upend business plans, seems more unlikely while pro-business initiatives already is place will remain intact. Additional tax cuts are also less probable and that may slow the deficit’s climb. And policy gridlock may also impede legislative growth initiatives, which could curb the strong dollar and rising yields. This would be good for emerging markets. However, there are plenty of uncertainties to keep volatility heightened. The trade war with China is still front and center. The latest China exports number surprised on the upside, soaring 18 percent in October, with demand from other emerging markets particularly strong, an indication of healthy global demand. Keep your eye on China exports and imports on page 49 of the Global Perspectives book.

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