2017, what we have to pay close attention

It is the second (or the third in China) day of 2017, the financial market has not been open yet and it is expected for the markets to be fully active next week given one week for preparation and providing 2017 guidance. There are some big events that could probably lead to a volatile shake-up of the world economy and are highly likely to happen in 2017. Some factors may also important in terms of the 2017 world economic performance.

The most obvious big events are how the British government is going to design its "divorce settlement" with the European Union, and how the new US president is using the fiscal policies to stimulate the US economy and influence different sectors in the US economy, how the firms and governments around the world are reducing their deficit or borrowing levels. Moreover, my previous article also suggests that the decision of whether the European Central Bank raises its rates as well in 2017 or not is also important, especially given currently the European Central Bank seems to have no intention to further expand its monetary expansionary policy.

There are some other factors that people need to pay attention to. Firstly, the commodity prices could reflect partially the world economic performance, especially the oil price could have a close and direct link with the financial market performance around the world. Based on the demands of the commodities, people could find out the demands around the world and estimate the economic outputs based on these raw material demands. Secondly, the preferences over financial investments could give us some expectations about which sectors in the economy will gain sufficient financial support and which sectors will not gain much support from the financial sector, as well as how confident the investors around the world are and what their risk preferences are like. Based on what the investors are likely to invest, we could estimate how the economy is going to perform. Thirdly, the possible tariffs introduced by some governments will have some significant effects on some countries' economic outputs as well as the domestic inflation rates.

2017 has more than average uncertainties and is likely to go up hill or down hill with similar probabilities.