“Make Volatility Great Again”: Ways to Capitalize on Chaos in 2017

The difference a year makes 

At this time last year, the S&P 500 was in the thick of its worst start to a year since the financial crisis, ending January down 5.07% for the month. At the same time, oil was on its way down to 13-year lows, and as the panic in markets grew, as did recession fears among market participants.

Conditions today couldn’t look more different. So far in 2017 we’ve had Dow 20,000 and new highs for both the Nasdaq and the S&P 500. While this market enthusiasm has been in place since the election, we think characterizing this as the “Trump rally” is a misnomer. Instead, we attribute the market optimism to a combination of the string of positive economic data that emerged in the months before the election and the Republican sweep of Congress. To us, those factors are far more significant than the Trump win alone. 

The volatility and opportunity ahead of us

In our view, Trump is a source of volatility, and we expect 2017 to be marked by volatility-inducing actions and communications coming out of the Oval Office. 

That said, the Republican control of Congress and the encouraging economic data inspires confidence, so we’re constructive on the corporate economy. 

To capture this unique outlook, where we expect both the volatility and opportunity ahead of us, we revisit three key signals we identified in 2016—PMIs, the dollar and investor uncertainty—and explore what they mean for investors this year.

Read more in the latest edition of my quarterly newsletter, "Signal or Noise?" 

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