Republicans unveiled a tax plan this week that would streamline the filing process for individuals, drastically lower the tax rate for pass-through entities, cut the corporate tax rate and eliminate the estate tax. The details and ultimate viability of each broad objective will be hammered out over the next quarter, but the news was a welcome relief to US equity markets after weeks of heated exchanges with North Korea and consecutive natural disasters. For those in Puerto Rico, the recovery is slow and painful complicated by limited fuel, transportation issues and old infrastructure. How this impacts the restructuring of the Puerto Rico’s municipal debt is unclear.

US stocks hit new highs while international and emerging stocks had a less impressive month. International stocks were impacted by the US dollar’s strengthening after declining for most of 2017. The dollar, in turn, was bolstered by more attractive US interest rates following the Fed’s September statement that implied a third rate hike for 2017 was still on the table for December. This shift in rate expectations is becoming more apparent in the fixed income returns. For years, shorter-duration, actively managed funds were easily beaten by the US Aggregate Index as the Fed continued to buy debt at any levels. Now, investors are starting to see a clear payoff for active fixed income strategies.