What's the Big Story for Equities in 2017?

The transcript discusses market expectations, focusing on the relationship between sentiment and valuation. It predicts that earnings will be the big story in equity markets for 2017, with potential risks from a strong dollar and inflation. Investment strategies favor cyclical sectors over defensives, with a focus on financials. Wage pressure is highlighted as an unappreciated risk, potentially affecting corporate margins and leading to faster Fed rate hikes. The discussion also covers volatility, with predictions of increased volatility in equities and divergence in other markets. The bond market's perspective on potential inflation and Fed actions is contrasted with the stock market's optimism.

What is the key factor that the market rally has been built on, according to the first section?

• Rising interest rates

• Improving expectations

• Decreasing inflation

• Stable currency exchange rates

Which sectors are preferred over defensive ones for 2017?

• Real estate and telecommunications

• Consumer staples and utilities

• Cyclical sectors like industrials and energy

• Technology and healthcare

What is considered an unappreciated risk that could lead the Fed to hike rates faster?

• Stable GDP growth

• Decreasing unemployment

• Increasing wages

• Rising commodity prices

What does the third section suggest about the expected trend in market volatility?

• Volatility is expected to be unpredictable

• Volatility is expected to increase

• Volatility is expected to remain stable

• Volatility is expected to decrease

How do the stock and bond markets differ in their expectations of economic outcomes?

• Bond market expects strong growth, stock market is cautious

• Both expect high inflation

• Stock market expects positive outcomes, bond market is cautious

• Both expect low interest rates