2017 and what to expect
If 2016 was a year of shocks and surprises, the only certainty about 2017 is that we can expect plenty more of the same. A bumpy ride seems predicted with Donald Trump preparing to lead the free world from the 20th January onwards…..However, don’t believe the “experts” who we all know just get it wrong time and again, and let them be surprised (not you) when “The Donald” breathes fresh air into the political systems. British Prime Minister Theresa May is also said to take the UK onto a journey into the unknown when she triggers Article 50 to begin the process of quitting the EU before the end of March. Again, don’t believe the hype, as the UK was fine before it joined the “Common Market” and will be once more when out of it. If the 5th largest economy in the world can’t stand on its own two feet, who can? I think the EU will miss the UK more than anything the other way around…………..
Trouble in store?
The European project faces a precarious year, with anti-EU populists jostling to overturn the existing order in the Netherlands, France and Germany. Terror attacks or a fresh refugee crisis at the wrong time could even sink the single currency. It is fundamentally flawed as most people know anyway. The Middle East is a perennial basket of uncertainty but other regions could also spring a global shock, especially if the Chinese credit and property bubbles finally burst. Vladimir Putin will doubtless have more tricks up his sleeve. The question is what impact this will all have on stock markets? The answer, after this remarkable last year, is that nobody knows.
Brexit was supposed to trigger a stock market and property meltdown, according to the “experts” but once again they were wrong. The FTSE 100 is menacing its all-time high and house prices continue to climb in London – at least for now. Trump’s victory was also expected to wreak share price havoc in the US but instead the Dow nudged 20,000 as investors toasted his proposed $1 trillion reflation blitz. We cannot rely on such contrarian reactions dominating investor thinking next year. All we can do is do is the opposite of what the “experts” say methinks! The FTSE 100, Dow and S&P 500 are trading around their record highs and may prove ripe for a partial fall as profits are taken. The Santa rally could end up in a New Year hangover – remember the January market rout in 2016? And while there were sound reasons for investors to celebrate the Pound’s fall and Trump’s reflationary hype, there will be little free market cheer in, say, a trade war with China, but maybe a President Marine Le Pen in France will get Europe moving again?
Here are two assumptions made by the “experts” that could quickly come unstuck: that oil prices and global interest rates will rise. The US Federal Reserve is lining up three more rates hikes in 2017 we are told, but it signalled four this year and delivered just one, and then only at the last minute. The Bank of England will hold off as long as it can, given Brexit uncertainty. So will the European Central Bank and Japan. The oil price rose spiked after the OPEC and non-OPEC cuts but it is already falling as US shale drilling activity picks up and crude inventories rise. I think a trading range of $50-60 per barrel will be the new norm? Nothing seems to go the way analysts expect these days, and so it should remain that way…
What to expect – conclusion? You need professional financial help from a qualified Adviser like never before, not just being flogged more plans from unqualified “product peddlers”