The predictions on 2017 have now come to an end. For every great prediction that the experts can hang their hat on, there are about five that they got wrong. Now that the New Year has started and the excitement of the holiday season is well and truly out of our system, we risk getting in the hot seat by making some sober predictions for the coming year.
Is this the year that the stock market finally finishes its unprecedented Bull Run?
For the last few years, predictions have abounded about the end of the Bull Run. For good reason, this current bull has gone on for years longer than was expected. As a result, each year has been heralded in with predictions of the end of this astonishing bull market.
However, chastened by year upon year of bad predictions, experts are now predicting a continuation of the current strong run, albeit at a slower pace than 2017. 14 of the Wall Street experts interviewed expect the S&P 500 to rise 5% in the coming year, down from the massive 20% increase of 2017, on the back of tax cuts and strength in the global economy. Along with these more muted predictions comes warnings of volatility and potentially slower growth.
What about the foreign share market?
With the muted optimism for the US market, there is a fear that the current run is losing steam, prompting asset managers to look overseas. According to David Lebovitz of J.P Morgan “As we consider the investment options available in the coming year, economies outside the U.S. are far earlier in their respective business cycles, and still experiencing double-digit profit growth”. All 45 OECD countries are expected to show economic growth, something that has not happened in more than a decade. Europe and Japan are amongst the more developed markets attracting attention, along with emerging markets.
Will politicians impact the markets this year?
Many interesting developments are expected to take place in the political front and will have significant impact on financial markets. Teresa May looked dead and buried at the UK elections in 2017, but has since crawled back from the dead in the last few months. Top of her agenda will be to push through with Brexit, allowing her to shore up support from the pro Brexit camp that put her in power. It is likely that she will pursue this aggressively, potentially unsettling markets. And, with consensus forecasts of a modest expected growth of 1.5%, it might be up to Brexit to provide the spark that the economy needs.
The euro zone that the UK is leaving behind has its own exciting decisions, with questions surrounding Emmanuel Macron’s ability to wrangle some money from Germany’s Angela Merkel. It is not expected that Macron will be successful, with the likely outcome being a small Eurozone investment fund. The roadmap involving a budget of several percentage points of Eurozone output is unlikely to occur, primarily due to Merkel’s weakening position in her most recent national elections and the German public’s cool reception to giving more money to the Eurozone.
Will Bitcoin top $100,000?
With the last 12 months going absolutely bonkers for cryptocurrencies, who knows? What we are sure of, is that volatility will continue as the world sits courtside for the exciting next chapter in technology’s fusion with finance. Another more certain prediction: it’s sure to be a wild ride!