We enter 2018 with significant transitions and uncertainties - both geopolitically and economically. For governments, corporations and individuals, the road ahead points to the continuing shift of global influence.
Outlook 2017 - Jack be Nimble
We entered 2017 with a wave of populism, manifested by inequalities creating global transitions and uncertainties. For the first time in history, the S&P 500 increased every month (dividends included). Canadian Equity and Emerging Market E-commerce were top contributors to positive performance.
We enter 2018 with significant global risks and uncertainties. The key difference between uncertainties and risks remiain that risks can be measured, and geopolitical uncertainties cannot. Here are the major things that will need to be watched:
A new geopolitical order is being shaped by some countries maintaining their path of globalization, while the US turns protectionist. A transition of world order, coupled with long-term secular trends, may create both uncertainties and opportunities.
A breakdown in longstanding domestic, regional and international equilibrium is making policymakers both less able and less willing to collaborate internationally. Nations are forming new alliances while the US moves inward - creating a protectionist economic landscape that is stamped with the slogan "America First".
Quantitative Easing to Quantitative Tightening
The experiment of extraordinary monetary easing is unwinding. We now appear to be heading into a period of tighter monetary and looser fiscal policy.
We are in a time of rapid change. G-Zero, disruptive technology and an aging population all have a role in global instability. Technology and connectivity are at the forefront of everything.
A late-cycle market combined with contintued global transitions, uncertainties and heightened geopolitical risk highlight the need to stay nimble. We will take advantage of volatility driven opportunities to build positions in our long-term thematic segments. Focus will be on hedging strategies and structuring portfolios to take advantage of opportunities presented by renewed market volatility.