2017 Forecast - A New Path: The Growth and Reflation Trade

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  • A surprise outcome in the U.S. elections ushered in a new path forward, and markets worldwide celebrated the promise of pro-growth economic policies with rising asset prices and rising bond yields
  • In effect, the markets took the reins from the central banks, clarifying the likely path toward rate normalization — reflation — and away from unconventional monetary stimulus
  • The prospect of business-friendly policies also supported a corporate earnings turnaround — potentially higher growth, increased pricing power and higher after-tax net income — a boon to global business
  • The paradigm shift will provide unexpected returns — and risks — that may create both positive and negative extremes, making a case for broad global diversification

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