Markets 2017 Review

In many aspects, 2017 has been a successful year around the world albeit with major challenges.

In the United States, the economy has continued to surge under President Trump. The just released GDP numbers showed that the economy expanded by about 3.3% with a few points being affected by the hurricanes. The unemployment rate is at a 20-year low and more than 1 million jobs have been created. The number of jobless claims have been reduced.

As a result, the stock market has had the best year since before the crisis. The Dow, Nasdaq, and the S&P 500 have gained by 26%, 28%, and 22% while the volatility index has stayed at an all-time low. In the coming year, investors will watch out for how the economy performs keeping in mind that the anticipated tax reform package has already passed.

In Europe, the year has been a bit quiet with the loudest noise coming from the Brexit negotiations. The UK continued to negotiate its divorce deal with the EU and the news coming from there moved the markets.

Early this year, Theresa May who had a majority in parliament decided to call an election in a bid to increase her majority. The election happened to be her biggest political blunder because her conservative majority reduced.

In Germany, the country faced an election in September and although Merkel won, her party lost the majority. Today, negotiations on forming a coalition government are still going on and some believe the country could go to another election.

In general, it has been a successful year for the EU, which has seen the unemployment numbers come down. More people have gotten jobs and the inflation has been contained. In the October meeting, Mario Draghi left interest rates unchanged and promised to continue his QE until September 2018 albeit at half the rate. This stimulus package was positive to the market with a key challenge being on the bank deposit rate, which is currently in the negative zone.

In the Middle East, it has been a challenging year with the crisis in Syria continuing. In the past few months, the Russian military started withdrawing from the country after Assad won vast regions. In the coming year, chances are that talks to have a political solution will continue.