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2017 Outlook: Active Investing Amid Reactive Geopolitics 

 

1/9/2017 

Despite major US market indices near record highs, the beginning of 2017 is no time for investor complacency. In a year that could have more surprises than 2016, Neil Dwane says active investing is a strategic imperative amid shifting geopolitical trends.

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Focus Shifts to Fiscal Policy and Populism

After a tumultuous year, investors should keep watch on the rise of populist politics, China’s re-emergence as a global growth engine and a renewed focus on government spending as interest rates remain low.

Key Takeaways

  • Populist politics will drive market volatility. Europe faces a year of Brexit-fueled uncertainty while we expect the US to turn inward as China and Russia become more assertive.
  • Lower-for-longer rates will linger. Financial repression remains in effect as the world seeks new ways to delever from massive amounts of debt.
  • Hopes will turn from monetary to fiscal policy. Negative interest rate policies and quantitative easing will evolve as countries shift attention from monetary to fiscal policy.

5 Investment Themes for 2017

Global economic growth Low, slow and dull

  1. Muted grow in developed economies
  2. Emerging markets look to prosper

Central banks Low rates for longer

  1. Fed expected to tighten further
  2. ECB and BOJ maintain loose monetary policy

China Drives growth in Asia and beyond

  1. Committed to expanding trade
  2. Engine of growth for global economy

Oil Demand and supply in balance

  1. Slightly rising oil prices will boost oil investment
  2. Prices will not rise high enough to reignite US shale boom

Geopolitics A change in trends is underway

  1. Nationalism and populism are on the rise
  2. Trump takes office amid key European elections

The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Forecasts and estimates have certain inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation.



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