Outlook 2017: Reading the Tea Leaves

Outlook 2017: Reading the Tea Leaves

It’s that time of the year when we take a quick look back and a longer look forward to try to discern what 2017 might have in store for us. But first, I’ve got a question for you. Is it just me or does anyone else feel like 2016 was a stressful year overall? China, Brexit, Dow corrections, Aleppo, U. S. elections, Paris, Brussels, the season premiere of The Walking Dead and Mariah Carey’s New Year’s Eve performance to highlight a few contributing factors. And that’s just scratching the surface.

A quick review shows just what an uncertain year 2016 was while helping us understand what 2017 might have waiting for us.

 

2016: Volatility and Uncertainty

Much of last year’s drama unfolded on the international stage with the first half of 2016 largely overshadowed by slower than anticipated growth in China. This caused a double-digit “correction” in the Dow. And just to keep things interesting, the price of oil dipped below $30 a barrel. The combination of those two events hit countries like Russia, Venezuela, Brazil and Saudi Arabia hard and created yet another ripple of uncertainty and paralysis in the global economy.

For Corporate America, 2016 was a year of deferrals on investments in areas like infrastructure and hiring. Hiccups in the global economy and the uncertain political future led to caution in boardrooms. As a result, many companies preferred to wait for the 2016 dust to settle before making significant financial decisions.

Finally, the U.S. presidential election cast the long shadow of uncertainty over much of 2016. Populist candidates like Sanders and Trump brought a new set of messages to the national stage and no matter which side of the political aisle you sat on, it was clear to all that big changes were just over the horizon. No, we’re not in Kansas anymore, Dorothy.

So what does all of that mean for 2017? Like you, the BlueSky team has to operate without the benefit of a crystal ball but as you might have guessed, we have a few ideas on what the New Year might have in store for us.

2017: Under New Management

We have a new president that will be taking office shortly. Whether you voted for him or not, Trump’s approach will have a significant impact on the year ahead. Just to be clear, our only intention is to discuss what impact Trump’s presidency might have. This year’s election was one of the most divisive in our nation’s history. But it’s over. So let’s get down to the business of analysis.

Has anyone noticed what’s been happening in the market? The bears have gone into hibernation and the bulls are running fast and loose. The market has essentially gone straight up since the election. The big question there is—why? For a group of people who normally panic in the wake of uncertainty, what are investors seeing on the horizon in 2017 that everyone else is not?

What they’re seeing is that Trump’s pro-business stance will benefit them and his guiding principles will likely be Jobs, Corporate America, the Economy (making America more competitive within the world) and National Security. For investors, those factors are a green light and we expect to see the market continue to strengthen over the coming year.

Trump campaigned heavily on protecting the interests of the nation’s workers, keeping jobs here and creating competitive economic advantages for the U.S. Based on this, we expect to see things like reduced regulation, corporate incentives to keep jobs in the U.S. and possibly reduced corporate taxes. The biggest winners here will likely be the defense, transportation, energy and financial industries who are likely to get a friendly nod from the incoming administration. Construction and construction-related companies also stand to realize a major benefit with Trump’s call for a major overhaul of the nation’s infrastructure.

With Trump’s political agenda largely driven by business issues, we expect to see political decisions put through the following filters:

  • Does it benefit American workers?
  • Does it protect and stimulate our economy?
  • Does it promote corporate growth?
  • Does it help keep our country safe and secure?

While we can’t cover every potential impact here, you can use these filters to understand how Trump’s administration might weigh in on issues that are relevant to you and your business.

Final Thoughts

2017 will most definitely be a year of significant change. This “peaceful transfer of power” that marks one administration’s exit and another’s entry is a hallmark of our nation’s culture. And it’s very much like a corporate restructuring, which means that nothing is safe or sacred in the coming months. Given Trump’s unorthodox approach there will most definitely be some surprises, bumps and course corrections. But our hope is that this new, emerging structure will create positive business benefits for us all in the year ahead. Stay tuned, it’s about to get really interesting!

From everyone here at BlueSky, we wish you a great 2017!

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