Infographic: 5 Key Predictions For Global Markets in 2018
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Summing Up 5 Key Predictions For Global Markets in 2018

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Despite being roughly nine years into the second-longest bull market in history, recent headwinds have cropped up to make the start of 2018 an interesting one for markets.

As investors re-evaluate their portfolios and exposure, it’s worth exploring some of the major themes and trends that are expected to drive markets in 2018.

Predictions for 2018

Today’s infographic was done in collaboration with Swissquote, a Swiss banking group, and it highlights their five most important predictions for the rest of the year ahead.

Taken from their 2018 Market Outlook Report, which can be downloaded for free, the following graphic discusses key themes of the year such as central bank policy, European unity, China, cryptocurrencies, and emerging markets.

Summing Up 5 Key Predictions For Global Markets in 2018

Enjoy the infographic? Get the full report for free from the Swissquote 2018 Market Outlook page.

Swissquote’s Predictions

Here are the high level points of Swissquote’s predictions:

1. Fed in Inflation Fighting Stance

Despite a strong economy, specifically tight labor markets, inflation has perplexingly not appeared. In Swissquote’s view, expansionary monetary policy by central banks is the primary reason for the current stretched valuations.

And of the central banks, the Fed is not only the most important – but also the most active. Expecting a sudden kick from ultra-tight labor markets to boost wage growth and consumer inflation, the Fed is again ready to act in 2018.

As a result, Swissquote sees U.S. GDP growing 2.2%, the labor market tightening, and annual core PCE inflation hitting 1.8%.

Prediction: The Fed will hike three times.

2. Unified Europe Will Emerge from Spain

The start of 2017 brought fears of the EU’s demise, as rising political populism suggested an end to EU federalism. However, despite recent events in Catalonia, Swissquote sees Europe actually emerging from 2018 more united.

Heading into 2018, economic sentiment in Europe is at 10-year highs. Further, the election of Macron in France – and the re-election of Merkel in Germany – will mean a continued push for deeper EU integration.

In 2018, Swissquote sees the following headwinds in Europe: uncertainty around independence in Catalonia, the Italian elections, and austerity in Greece.

Prediction: The powerful trio of Macron, Merkel, and Draghi will weather the storm – and their unity will have a profound effect on pricing in events such as Brexit and the Italian elections.

3. China Grabs the Political Void

China’s economy will slow in growth slightly in 2018, but the country’s regional economic dominance is undisputed. With a GDP (PPP) of $21.5 trillion, it even dwarfs India ($8.7 trillion), Japan ($5.3 trillion) and Russia ($3.4 trillion) combined.

And empowered by the volatile behavior of President Trump, China has embraced its new role as regional and global leader. Judging from the 2017 World Economic Forum in Davos and the Chinese Communist party congress, Xi Jinping and China are ready to step into the light.

Prediction: China will step up efforts to further entrench its hybrid model, which includes politics and economics.

4. Cryptocurrencies are the Real “Populist” Vote

While the Brexit and Trump votes represent the protest of existing systems – there’s also a monetary component to that populism that is hiding in plain sight.

Central banks have created trillions of dollars out of thin air since the 2008 crisis, and people no longer trust the government to protect their money and wealth. As a result? People have been pouring money into bitcoins and altcoins instead.

Prediction: This “populist” vote against the monetary policy of global central banks will continue in full form.

5. Emerging Markets Lead the Growth Charge

GDP growth in emerging markets for 2017 is expected to be 4.5% – its highest point since 2015 – versus 2.1% for developed markets.

Although protectionism will continue to make the headlines, any real action will be limited, even by the Trump administration.

Prediction: The story for EM in 2018 will be a further increase in international trading. Following a trend, China has reached 15 free-trade agreements with 23 countries and regions. And like in 2017, emerging markets will continue to have more growth and higher returns as a result.

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Markets

The Top Google Searches Related to Investing in 2022

What was on investors’ minds in 2022? Discover the top Google searches and how the dominant trends played out in portfolios.

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Trend lines showing when the top Google searches related to investing reached peak popularity over the course of 2022.
The following content is sponsored by New York Life Investments

The Top Google Searches Related to Investing in 2022

It was a turbulent year for the markets in 2022, with geopolitical conflict, rising prices, and the labor market playing key roles. Which stories captured investors’ attention the most? 

This infographic from New York Life Investments outlines the top Google searches related to investing in 2022, and offers a closer look at some of the trends.

Top Google Searches: Year in Review

We picked some of the top economic and investing stories that saw peak search interest in the U.S. each month, according to Google Trends.

Month of Peak InterestSearch Term
JanuaryGreat Resignation
FebruaryRussian Stock Market
MarchOil Price
April Housing Bubble
MayValue Investing
JuneBitcoin
JulyRecession
AugustInflation
SeptemberUS Dollar
OctoberOPEC
NovemberLayoffs
DecemberInterest Rate Forecast

Data based on exact searches in the U.S. from December 26, 2021 to December 18, 2022.

Let’s look at each quarter in more detail, to see how these top Google searches were related to activity in the economy and investors’ portfolios.

Q1 2022

The start of the year was marked by U.S. workers quitting their jobs in record numbers, and the effects of the Russia-Ukraine war. For instance, the price of crude oil skyrocketed after the war caused supply uncertainties. Early March’s peak of $125 per barrel was a 13-year high.

DateClosing Price of WTI Crude Oil
(USD/Barrel)
January 2, 2022$76
March 3, 2022$125
December 29, 2022$80

While crude oil lost nearly all its gains by year-end, the energy sector in general performed well. In fact, the S&P 500 Energy Index gained 57% over the year compared to the S&P 500’s 19% loss.

Q2 2022

The second quarter of 2022 saw abnormal house price growth, renewed interest in value investing, and a bitcoin crash. In particular, value investing performed much better than growth investing over the course of the year.

IndexPrice Return in 2022
S&P 500 Value Index-7.4%
S&P 500 Growth Index-30.1%

Value stocks have typically outperformed during periods of rising rates, and 2022 was no exception.

Q3 2022

The third quarter was defined by worries about a recession and inflation, along with interest in the rising U.S. dollar. In fact, the U.S. dollar gained against nearly every major currency.

Currency USD Appreciation Against Currency
(Dec 31 2020-Sep 30 2022)
Japanese Yen40.1%
Chinese Yuan9.2%
Euro25.1%
Canadian Dollar7.2%
British Pound22.0%
Australian Dollar18.1%

Higher interest rates made the U.S. dollar more attractive to investors, since it meant they would get a higher return on their fixed income investments.

Q4 2022

The end of the year was dominated by OPEC cutting oil production, high layoffs in the tech sector, and curiosity about the future of interest rates. The Federal Reserve’s December 2022 economic projections offer clues about the trajectory of the policy rate.

 202320242025Longer Run
Minimum Projection4.9%3.1%2.4%2.3%
Median Projection5.1%4.1%3.1%2.5%
Maximum Projection5.6%5.6%5.6%3.3%

The Federal Reserve expects interest rates to peak in 2023, with rates to remain elevated above pre-pandemic levels for the foreseeable future.

The Top Google Searches to Come

After a year of volatility across asset classes, economic uncertainty remains. Which themes will become investors’ top Google searches in 2023?

Find out how New York Life Investments can help you make sense of market trends.

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