Following a brief episode of turmoil toward the end of 2016, we discuss how municipal bond portfolios should be positioned as the new year gets underway.

A new report which unravels the economic and investment implications of the Trump Administration.

With the recent OPEC agreement to potentially manage global oil production in 2017, the fundamentals for the broad energy sector in the US continue to improve. We believe this sets a favorable backdrop for the Master Limited Partnership or MLP sector in 2017.

With just two weeks remaining in 2016, the S&P 500 is up about 10% for the year and 12% including dividends. Nearly half of the year's gains have occurred over the past six weeks following the presidential election, as investors have focused on the upside of a new Republican-controlled administration.

Yesterday the FOMC raised rates by 25 basis points, its first hike in a year and only the second hike in the last decade. This was in line with market expectations and our own, but even when the Fed does what's expected, there are three factors that can have an influence on market reaction: the F O M C statement, the Summary of Economic Projections, and Fed Chair Janet Yellen's news conference. In this case, market reaction was fairly strong, certainly stronger than I would have expected given the outcome of the meeting. Since the announcement, the dollar is up around 2% and 10-year treasury yields are up about 15 basis points.

With potentially slowing earnings growth and historically high valuations, we believe the utility sector is poised to underperform the broader market over the next 6-12 months and should be unplugged from diversified portfolios. There are three important points in the report we recently published on the utility sector that support our underweight sector view. First, the drivers to earnings growth over the next 2-3 years are deteriorating. Second, electricity sales continue to stagnate. And third, the potential for Federal corporate tax reform could be negative for utilities, and likely increases regulatory risk for the sector.

No one has been more damaged by the seemingly normal economic conditions of low interest rates, modest economic growth and low inflation than income-seeking investors, like retirees. In the newest edition of Your Wealth & Life, we address this challenge by discussing the driving force behind the current economic environment and by providing strategies to help retirees bridge the income gap.

Preferreds have been pressured by the sharp rise in interest and accompanying spread widening. $25 par preferreds have also been impacted by ETF outflows. We continue to favor defensive structures, which have held up better during the sell-off.

It's been a volatile month for municipals, and we've entitled this month's Municipal Market Guide "Weathering the Storm" as a result. The reversal has breached what otherwise had been a relatively long period of tranquility in the municipal market.

How have markets reacted to the US election, and how have our outlook and positioning changed?