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Investment theme for 2017



2016 delivered a shock election of President Elect Donald Trump. Elections in Europe set to dominate headlines in 2017. Anger is rising against islamic refugees in Europe - these conditions favor leaders like Marine Le Pen (of France) and Geert Wilders (of Holland) to win national elections. Germany is likely to shift to far right as well. This theme will be prevalent across Europe in 2017. Election of Donald Trump thaws the ice between US-Russia relations which can seen as a positive sign in the geopolitical scene in 2017. President Putin is undoubtedly the most powerful and decisive figure in the world as of today. It is in good interest of any nation to keep friendly relations with Russia. Russia made successful military gains in Syria, Iraq & Ukraine - with change of guard in Europe & US - the war against radical islam in Middle East is likely to expand more.

President Trump seems very unpredictable as of now with regards with almost everything be it foreign policy or economic agenda. Lot of campaign promises were made to reduce corporate taxes, loosening government regulations, boosting job growth in manufacturing sector, repealing Affordable Care Act. The rust belt of US is suffering due to slump in oil/gas/coal & manufacturing sector since years. The impact of new administration's policies on growth of renewal energy related business is also unclear. FED is likely to keep raising interest rates resulting in negative impact on housing market & auto sales. Oil prices also continue to increase. Given that two major Asian giants India & China are going through monetary and structural reforms & with political/economic uncertainties in Europe - the world economy is likely to remain flat or in fact negative for year 2017. Banking sector seems to be favorite pick on wall street for 2017 but the banking stocks have already rallied to the end of 2016. I am not selecting finance sector for 2017.

In light of of these uncertainties in US & world markets I recommend safe plays for 2017

JNK - Corporate bond index fund which is overweight in the oil sector

PFF - Preferred Shares index ETF

IHF - Health Care Providers ETF

IBB - Nasdaq Biotech ETF (Risky play but needed to balance the portfolio)


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