Lord Abbett 2017 Global Investing Outlook

As the dust settles from the U.S. presidential election, what might investors expect in the coming year? New U.S. leadership working with a Republican-unified Congress likely will have a meaningful impact on U.S. investment values, especially if legislation involving infrastructure spending, repatriation of U.S. corporate foreign cash, and tax reform become early priorities in 2017.

Just as influential will be macro factors that weigh on global growth and interest rates. The uncertainties of the “Brexit” process, as the United Kingdom negotiates its separation from the European Union (EU), the related tilt toward protectionism in many nations, the pursuit of currency weakness by major non-U.S. economies, and continued “lower for longer” interest-rate policy should combine to support interest in U.S. investments.

Differences between the U.S. economy and many advanced economies with regard to monetary policy, currency movement, and economic growth may define investor preferences among many asset classes in 2017. Here, we survey what 2017 may bring for major global economies—and key U.S. investment categories.

• Differences between the U.S. economy and many advanced economies with regard to monetary policy, currency movement, and economic growth may define investor preferences among many asset classes in 2017.
• In the shadow of “Brexit,” trade tariffs between the United Kingdom and the European Union will result in more expensive imports and slower economic growth in both regions.
• Aggressive monetary policy in Japan continues to keep interest rates low and often negative. In China, growth seems dependent on government stimulus programs that are, however, losing their effectiveness.
• Investors may find more appealing options in the United States, where current modest growth rates may be boosted by policies of new U.S. leadership, including contributions from government spending and tax cuts.
• The key takeaway—A resilient U.S. economy, spurred by fiscal stimulus, could make 2017 a respectable year for a variety of U.S. investments.

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