Expect periods of sharp volatility as 'lack of macroeconomic visibility' spooks markets

It is likely that the value rally in equity markets has largely played out and how the current 'value-versus-growth' dynamic continues in 2017 depends on a confluence of factors.

Loose monetary policies have underpinned equity markets in the absence of macroeconomic growth, so how policymakers withdraw from their highly accommodative stance from here will be a key concern, as markets are vulnerable to any form of disappointment.  Recent dollar strength may prove problematic for the US economy and will likely influence the Federal Reserve's interest rate policy in 2017. The broad consensus now is this emphasis will shift to fiscal stimulus, in the form of tax cuts, infrastructure expenditure and favourable free-trade deals, which could prove to have a positive ...