Many were scared of the reaction to a Donald Trump presidency, even the Federal Reserve open market committee. How do we know that? They telegraphed the uncertainty in their statement following the November 2 meeting. Well, not in so many words but they certainly telegraphed their intention to hold off in November raising rates, fearing some sort of backlash and financial calamity could ensue post election. This was a similar stance as before the Brexit vote, and while there was a decent amount of volatility then, following the vote the Fed was able to embark on their mission of data dependency and monitoring the economy and inflation.

With much of the rhetoric being tossed around and fear of new government policy objectives, it certainly had the Fed a bit nervous and wary over policy shifts. Further, they did not want to be seen as influencing an election, so this past meeting they took a pass – knowing full well waiting a month to tighten (if they so choose) would not be disruptive. Who could blame the Fed for waiting, but they may have found an ‘out’ from accommodative monetary policy from none other than – Donald Trump!

Markets reacted instantly to the results. Equity futures plunged sharply but then bounced back through the morning and then into the next trading day, players realizing the end of the world was not drawing nigh. In fact, volatility fell sharply, expected as the uncertainty of the event was removed. Jim Cramer and I talked about this likelihood in last week's off the chart segment. Certain sectors rallied harder than we've seen in years, like the banks, financials, materials, infrastructure and home repair. Small caps were on fire, the Russell 2K rising an astounding 10% on the week.

The most notable move was in bonds and gold. Both were trashed this past week, while the dollar enjoyed a solid move up. Optimism abounds with the new administration taking shape, it's yet to be seen if this is smoke and mirrors. However, the market tells the truth - and if one were to believe this move was real (the selling was intense in bonds while stocks really picked up that high turnover) then perhaps blue skies ahead.

Why would bonds sell off and equity markets rally? Perhaps the markets are sniffing out some potential economic growth to come, finally with some policies that will stimulate rather than monetary policy. Productivity is the key here, which the market may be seeing (strong potential growth driven by higher productivity and not inflation). This is an ideal situation for the Fed to gradually remove an easy Fed policy. Potentially a win/win for everyone. Imagine that!