An Open Letter from Doug Kennedy. In light of recent events within the banking industry, President and CEO of Peapack-Gladstone Bank, Doug Kennedy, has been moved to address an open letter to clients as well as the general public.
The Weekly Economic & Market Recap
December 2, 2016
The equity market has mostly rallied since the November 8th election, but significant divergences have emerged. A prime example of this has been the stark difference in performance between the Nasdaq 100 and the Dow Jones Industrial Average. Since Mr. Trump’s victory, the Dow has rallied 5.1%, but the Nasdaq 100 Index is actually down 1.5% as of yesterday. Sector and industry analysis also shows that the market has rotated sharply into and out of certain groups – banks vs. utilities. Of course the most notable reaction has been the back up in interest rates. The 10-year U.S. Treasury yield has moved from 1.85% before the election to 2.38%. We expect the visceral reaction by the financial markets will moderate over the next few months, as the reality of implementing change is always more difficult than expected. The underlying global fundamentals remain the same and suggest a lower growth environment with below normal interest rates. If Mr. Trump and Congress agree on a robust and efficient stimulus plan (especially on the tax side), we could see the domestic economy advance at a higher rate over the next few years.