Stocks have been lethargic. Having paused their frenetic rush higher. Though volatility was lower this week. Showing that institutional investors have few concerns about the recent pullback. Some of which has been driven by sector rotation. As investors lock in gains and reallocate into concerns that have not fared as well.
Perhaps markets are preparing for a breather. And if tax reform does get down, it would not shock us to see stocks move briefly lower. A classic "buy the rumor, sell the news" development.
Of course, what should one expect after the record run-up? The S&P 500 remains in its second-longest bull market. Having lasted 3,188 days and gained 284 percent since March 9, 2009. The longest bull market in history? December 4, 1987 to March 24, 2000. That Roan Toro ran 1,306 days further than has the current bull. Equating to an additional 3.7 years. Posting a gain of 528 percent. So, even with pauses, breathers, head fakes and corrections, one can imagine, if not dream of, the possibilities.

Moreover, this rally has a firm underpinning. As U.S. and global economies are healthy and growing. Central banks remain accommodative. Earnings growth has surprised to the upside. Deregulation is providing a more business friendly environment. And inflation remains low, allowing P/E multiples to levitate higher.
All of which led to the Dow Jones Industrials Average closing over 24,000 or the first time last Thursday. Marking the sixth 1,000-point threshold achieved since last November's election.
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The story of the day remains the GOP's tax-overhaul efforts. With ongoing discussions about the legislation's potential winners and losers. As well as potential complications from coming conference committee to align House and Senate approaches. The House leadership expects the Obamacare individual-mandate repeal to be in the final bill, and said ending corporate Alternative Minimum Tax is a priority.
Another issue? The government funding challenges ahead of Friday's deadline. GOP leadership is building support behind a stopgap funding measure that would extend through December 22. So providing additional time for negotiations. Because all of the months leading up to this week weren't enough.
Honestly. It's like watching a teenager procrastinate on a science fair project until the day before its due. Very reminiscent of the scene from this classic comedy, here.
As of Monday, President Trump and congressional leaders remained at an impasse on the 2018 federal budget. Leaving constituents to teeter on the brink of a government shutdown. The deadlock, in part, centers on how much to raise budget caps for the defense and non-defense sides of the budget.
The Congressional Budget Office (CBO) projects that Trump's plans would exceed caps by $295 billion through 2021. The year the caps established under the 2011 Budget Control Act expire.
The CBO score comes as Trump closes out his first year in office without substantially advancing his promise to "rebuild the military." And with statutory budget caps in place, no clear political path to the massive defense increase required to achieve it.
Across the pond, European attention remains on Brexit after UK Prime Minister Teresa May was unable to get Brexit divorce deal Monday. This becomes a make or break moment for Mrs. May. As those constituents who elected her voted to leave the EU. If she cannot expeditiously figure out a way to get that done, she's finished.
Over in the Middle East, one can hear the drums of war. As a vicious civil war rages on in Yemen. Where nearly seven million Yemenis remain at risk of starvation.
Monday saw the death of former Yemeni strongman and 33-year President Ali Abdullah Saleh. Which will lead to further political fracturing. Making it difficult for opposing parties to negotiate an end to the conflict. Even as renewed fighting in the capital, Sana, could worsen the humanitarian crisis afflicting Yemen. One that the United Nations has called the world's worst.
Meanwhile, fighting and airstrikes continued in the capital. The International Committee of the Red Cross said that at least 125 people had been killed and many more had been wounded since Wednesday.
This, as Iran and Saudi Arabia appear to be digging in for what could be a long and brutal proxy war.
Staying in that volatile region, it appears President Trump will soon recognize Jerusalem as Israel's capital. Kicking off plans to build a new embassy there, replacing the current base in Tel Aviv. A move that will aggravate tensions among Muslim nations throughout the Middle East. As no other nations, to our knowledge, have yet recognized Israel's capital transition to Jerusalem. And it has always been viewed as a move to be determined through the peace process.
A running list of nation's and organizations have warned the U.S. against the Jerusalem move, including: Jordan, France, Turkey, UAE, Saudi Arabia, Egypt, Qatar, Palestine, Morocco, Kuwait, Germany, Arab League, the EU and Iraq.
We have a hard time discerning why this move -- given all the other items carrying the day -- is currently so critical. The Middle East is a tinderbox. Why light a match?
Still, Israel moves no chess pieces without considering its next seven moves. So, we're certain something strategic is afoot. But from a U.S. vantage point, I'd think we've other priorities. And can continue to support Israel without stoking any further flames.
Lastly, the Christmas Rally looks like it might have been front-end loaded this year. Leaving little for Santa to leave behind. We may still end the year with a flourish, but I doubt it will be as dramatic as years past. Given the performance hereto now. And the political issues being bandied about. Of course, we've been wrong before.
Stay tuned for your next financial markets weekly update…
Financial Markets Weekly Recap
Major indices finished mixed last week. The DJIA gained 2.86%. The S&P 500 rose 1.53%. The Nasdaq fell 0.60%. While small cap stocks gained 1.17%. 10-year Treasury bond yields rose 2.1 basis points to 2.364%. And gold closed at $1,280.30, down $8.50 per ounce or (0.66)%.
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