Where to make money in 2018

As 2017 draws to a close, the question increasingly on investors' minds is where they can make money in 2018.  Below is a summary of our key macro and market views.

• Strong global macro backdrop. Going into 2018, the global economy is in the best shape it has been in six to seven years. In The Big Picture: Global economy still on a roll, we argue that the global expansion is set to continue, albeit in a slightly lower gear than in 2017, as we expect a slowdown in China to weigh slightly on global activity. Still, the global economy is set to continue growing above the trend rate next year, driven increasingly by fixed investments, which have widely been the missing link in the global recovery until this year.
  
  We look for core inflation in the US and euro area to increase only gradually. The main reason for this scenario is our expectation that wage demands will continue to be fairly moderate and that the Chinese slowdown will reduce the inflationary impact of commodity prices.
  
  The benign inflation picture should allow the central bank exit to take place at a measured pace. Adding to the positive picture is the lack of big risk factors to growth at the current time. On our watch list, though, is the Italian election next year, North Korea and the tensions in the Middle East.

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