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.

Discuss the potential risks associated with the current economic environment as mentioned in the text.

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What are the implications of volatility trends in the stock and bond markets for investors?

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