4 Risks That Could Upend Markets In 2017Friday January 20, 2017 10:25
(Kitco News) - Jan. 13 â€“Increased volatility in the stock market at these lofty, nosebleed levels warns of the potential for a correction ahead. It is well known that market volatility typically increases at both tops and bottoms.
As we enter 2017 and begin to navigate a new economic and political world, there lie many potential boulders in the road for the equity market bull.
As many analysts have warned â€“ the stock market is priced to perfection â€“ the recent rally has priced in expectations that President-elect Trump's proposals will sail through Congress and tax cuts, infrastructure spending and deregulation will fuel stronger economic growth and corporate earnings.
Here's what one analyst had to say:
"This week it has become clear that Trump driven trades
Â were overdone? late last year. With Inauguration Day a week
away, the reality that he may not be able to do as much as quickly
as traders had been hoping has started to sink in. The realization
that it's not all sunshine and lollipops and the road ahead could be
bumpy with twists and surprises has sparked significant intraday
Â swings and trading opportunities that may continue today."
- Colin Cieszynski, chief market strategist at CMC Markets.
In its fascinating report: Top Risks 207: The Geopolitical Recession, the Eurasia Group outlined a number of risks and warns there are many.
"This year marks the most volatile political risk environment
in the postwar period, at least as important to global markets
as the economic recession of 2008. It needn't develop into a
geopolitical depression that triggers major interstate military conflict
and/or the breakdown of major central government institutions. But
such an outcome is now thinkable, a tail risk from the weakening of
international security and economic architecture and deepening
mistrust among the world's most powerful governments."
- The Eurasia Group report.
Market action: Gold sold off swiftly in November in the wake of the presidential election, but has found a bottom around $1,125. While the jury is still out if that low could be tested, there are a number of major risks on the horizon that argue for a generally higher price trend for gold in 2017.
Here are a just a few of risks that lay on the horizon for 2017.
Is your portfolio properly hedged? There are a number of risks that could send equities correcting lower in 2017. Gold is a proven portfolio diversifier and tends to climb when stocks decline. Consider using this period of relative market calm to hedge and protect your assets.