‘In America, anybody can be President. That’s one of the risks you take’ said Adlai Stevenson II, who was twice defeated by Dwight Eisenhower in his bids to become president in the 1950s. Extremely relevant 60 plus years later where Donald Trump rose from a no-hoper to President elect in a matter of months.
2016 was definitely a year of surprises with both Brexit and the US election providing results which just prior to each event, would have provided you with handsome odds. Once again the prediction accuracy of opinion polls came into serious question and one thing is for sure, we are definitely entering a different era when it comes to populist uprising.
A well-publicised call by RBS in January 2016 to ‘sell everything ahead of a cataclysmic crisis’ backfired immensely as despite a number of troublesome events, several markets ended the year on all-time highs. It was fair to say that several market commentators and participants shared that initial pessimism, however 2016 proved to be a positive year despite the perceived headwinds that arose.
We have yet to see resolutions to many of the events of 2016. Brexit is still a long way from any kind of clear outcome and Mr Trump is yet to be inaugurated. There are issues in other regions too. Populism is on the rise in Europe, China and Russia have growing policy ambitions, the Syrian conflict continues with no solution in sight and the ISIS threat looms globally.
Henry Ford once said ‘When everything is going against you, remember that the airplane takes off into the wind, not with it’.
We enter 2017 with plenty of unknowns and indeed plenty to consider. The US president could provide a source of further surprises to both the positive and negative and governing by ‘tweet’ could become an interesting new paradigm. Europe has its challenges, particularly on the political front with elections scheduled for the Netherlands, France, Germany and potentially Italy. We will of course be watching and monitoring all aspects very closely.
This edition of Investment Outlook and Review covers:
Fixed Income | U.S.A. | United Kingdom | Continental Europe | Japan | Asia ex Japan & Emerging Markets | Conclusion
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