even more outlook 2018

Buy:
- UK
- GBP
- Japan
- Europe
- defense ETF ITA
- mining commodities
- zinc as predictor
- slv, copper


Risks:
- US midterms 2018
- US elections 2020
- indexing bubble

more outlook 2018

2018 places to invest:
- small cap value
- precious metals
- Asia tech
- EM

Risks in 2018:
-ECB liquidity pullback 2018 sep
- Catalonia exit
- Fed rate rise more than expected

outlook 2018

Continuing strong economic and earnings growth and still-low inflation should keep overall investment returns favourable but stirring US inflation, the drip feed of Fed rate hikes and a possible increase in political risk are likely to constrain returns and increase volatility after the relative calm of 2017:

• Global shares are due a decent correction and are likely to see more volatility, but they are likely to trend higher and we favour Europe (which remains very cheap) and Japan over the US, which is likely to be constrained by tighter monetary policy and a rising US dollar. Favour global banks and industrials over tech stocks that have had a huge run.
• Emerging markets are likely to underperform if the $US rises as we expect.
• Commodity prices are likely to push higher in response to strong global growth.
• Low yields and capital losses from a gradual rise in bond yields are likely to see low returns from bonds.

The main things to keep an eye on in 2018 are:

• The risks around Trump – the Mueller inquiry and the mid-term elections. We don’t see the Republicans impeaching Trump (unless there is evidence of clear illegality) but he could turn to more populist policies such as a trade war with China, a spat over the South China Sea or a clash with North Korea to boost his support.
• How quickly US inflation turns up – a rapid upswing is not our base case but it would see a more aggressive Fed, more upwards pressure on the $US, which would be negative for US and emerging market shares and a rapid rise in bond yields.
• The Italian election – the anti-Euro Five Star Movement is likely to do well and, even though it’s hard to see them being able to form government, this could cause nervousness;
• Whether China post the Party Congress embarks on a more reform-focussed agenda resulting in a sharp decline in economic growth – unlikely but it’s a risk. 

Source:

Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP Capital

3 stocks sectors that will win in the Fed's great balance sheet unwind

1. Healthcare
2. US small caps
3. Europe

-Stephen McBride

3 Black Swans

1. Yellen overshoots
2. ECB runs out of bullets
3. Chinese debt meltdown

- John Mauldin

How the yield curve forecasts recession

Very steep yield curve - inflation is likely to accelerate
Inverted yield curve - predicts coming recession
When inversion ends and begins to steep again - economic recovery, great time to buy bonds

- Rob Insana , Message of the Markets

Note: this warning sign may have become surpressed under the Fed's artificial low interest rate policy

Franklin Templeton Investments market outlook 2H2017

Developed markets : 

-potential negative long-term challenges on the horizon for equities 

Emerging markets :

- India, Indonesia, Brazil,Argentina and Colombia 

- more consumer-driven and technology sectors