Market volatility in December tested the emotions and confidence of even the most experienced investors.  The resignation of James Mattis as Secretary of Defense, rumors that President Donald Trump would fire Federal Reserve Chair Jerome Powell and the shutdown of the U.S. Government were unwanted gifts for investors hoping for a restful holiday season. 

The market may have overreacted to some of the latest developments in a turbulent year, and December’s market slide is more likely to be a pause in the bull market rather than the start of an extended bear market.  Government shutdowns are becoming a more frequent occurrence, and we are hopeful that this shutdown will end shortly into the New Year.   It is unclear whether Trump can legally fire Fed Chair Powell, and doing so would meet with opposition from both Democrats and Republicans on Capitol Hill.  Fed policy wouldn’t likely change if Powell were removed from office, as the remaining members of the Board of Governors would be united in defending the independence of the central bank.