As we approach the end of the beginning of the year, we know a couple of things:

• The S&P 500 is up just shy of 1.5 percent for the month, as I write this. If the market mantra “As goes January so goes the year” holds, we’re in for a pretty good year, at least for the stock market.
• President Trump actually meant most of his campaign promises and is proceeding to act on them as quickly as he can.

Last week showed more signs of a potential slowdown in the economy. Housing lagged, despite remaining at strong overall levels, and GDP growth and business investment slowed. But although the headline figures were disappointing, the details were better, suggesting that the current weakness is only temporary.

In the past couple of days, I’ve led a pretty optimistic quarterly call for investors, given a couple of pretty optimistic TV interviews, and written some fairly optimistic pieces here on the blog. Although I stand by all of my statements, it occurs to me that, for someone known as Eeyore, I’ve displayed an unusual amount of optimism lately.

It was less than two months ago—58 days to be exact—that I last wrote about stock market records. At that point, I noted that the market was at record highs, with the Dow Jones Industrial Average having crossed 19,000 and the S&P 500 above 2,200. And here we are again, with the Dow over 20,000 and the S&P over 2,300. Has anything changed?

The discussion about the economy lately has revolved around what the new administration might do in several key areas, including trade. In his inauguration speech, President Trump made it very clear that he intends to carry out the promises he campaigned on, and his recent decision to withdraw the U.S. from the Trans-Pacific Partnership (TPP) shows that he’s serious. Next up, NAFTA.

As the Trump administration gets under way, there are two major economic concerns to keep an eye on. The first is trade, which we will discuss tomorrow. The second doesn’t have anything to do with the President, at least directly. It is monetary policy—specifically, how and when the Federal Reserve will raise interest rates.

Last week’s news was mixed, both in the data reported and in the trends, suggesting the economy slowed into the end of last year. Nonetheless, while the pace has decelerated somewhat, improvement does continue and remains likely to do so into 2017.

In the early days post-inauguration, will financials keep doing well? Will we continue to see the kind of outperformance that we’ve witnessed recently?

Today, America carried out the peaceful transition of power that is at the heart of our democracy—except that we don’t actually have a democracy but a republic. In a democracy, the people make the decisions. In a republic, they elect representatives who make the decisions for them. This is a subtle but important difference, and one that represents a very deliberate decision by the founders, who distrusted popular sentiment.

In yesterday’s post, I discussed how corporate earnings will likely continue to improve, which should be good for the stock market on a fundamental basis. That’s not the whole story, however.