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Looking at 2017, we believe this year will be defined by rates, reflation and rotation as the market adapts to a new political regime. The shift from monetary to fiscal policy is now underway fueling further momentum in the reflation trade. Based on historical inauguration year price trends, we also expect another year of elevated volatility as President Trump settles in as president making active management paramount to outperformance.
Overall, we see an encouraging backdrop for equity markets in 2017 based on constructive economic and technical trends. We also believe the reflation trade will further impact the fixed income market and we remain bearish on treasuries. From our perspec tive, we see few alternatives to U.S. equities and reiterate our call for 2,424 on the S&P 500 by year -end 2017.
Craig Johnson, CFA, CMT is a managing director and chief market technician at Piper Sandler, directing the technical research group. Johnson joined Piper Sandler in 1995 as an analyst in the firm’s private client research. Mr. Johnson frequently shares his technical views on CNBC and other major financial news networks, and his research is often quoted in the financial press. He earned a bachelor’s degree with an emphasis in finance, marketing, insurance, and an MBA degree from Drake University. He holds the Chartered Financial Analyst™ and Chartered Market Technician designations and is an active member of the Twin Cities Society of Securities Analysts and co-chapter chair of the Minnesota Chapter Market Technician Association. Johnson is a former president of the CMT Association and currently leads the Technical Analysis Education Foundation (TAEF).