NEW YORK, NY - JANUARY 04: Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) ahead of the closing bell, January 4, 2018 in New York City. The Dow closed above 25,000 for the first time ever on Thursday. (Photo by Drew Angerer/Getty Images)
© Getty

This article is from today’s FT Opinion email. Sign up to receive a daily digest of the big issues straight to your inbox.

Making predictions is a risky business in the quietest of times. But forecasting what lies ahead during periods of political and economic turbulence should be done with caution. Events, at present, have a habit of foxing even the most seasoned commentators.

In her column, Rana Foroohar sensibly avoids specifics for 2018 and instead examines three themes that might move markets. First, wages. Unemployment is shrinking in America and wages are rising. But for many, it has been too little too late. The middle classes in particular have not seen many gains and will begin to feel increasingly unhappy.

The second thing to watch is corporate spending. The whole purpose of the Republicans’ tax cut was to stimulate investment. We will see if companies do bring back hoards of overseas funds and use them to stimulate further growth. Rana thinks that most big companies are more likely to use the savings on mergers and acquisitions, share buybacks and dividend payments.

The final theme to watch is the possibility of a market correction. Big Tech is the most obvious trigger. The sector has been the key driver of global equities but the business model is based on light touch regulation that could be challenged at any time. EU and US regulators are expressing more interest in the FANGs (Facebook, Apple, Netflix and Google) while restrictions on bitcoin trading remains a possibility. And of course, further revelations about Russian meddling in US elections could create more worries for tech firms. 

Saving the Eurozone: Euclid Tsakalotos, Greece’s finance minister, says that banking union alone is not enough to save the eurozone. Economic growth should not mask the need for further reform of Europe’s financial system.

Nuclear tightropeBeatrice Fihn argues that the only way to ensure nuclear weapons are not used is to abolish them. They are not effective weapons and serve no military use, she writes, while putting the lives of millions at risk. 

Macron’s successNicolas Colin says Emmanuel Macron must think strategically if he wants to be a truly transformative president. The French leader needs clear, simple goals and the ability to show he can ensure continuity of his vision.

What's for 2018

Best of the rest

Call Dr Stalin: the NHS must be forced to unify — Camilla Cavendish for The Times

‘Button’ It, Mr. President — Peggy Noonan in The Wall Street Journal

The State Where Everyone Wants to Be Governor — Frank Bruni in The New York Times

The Trumps and Kushners may spell the end of the Wilsonian world — Anne Applebaum in The Washington Post

The sun may never set on British misconceptions about our empire — Ian Jack in The Guardian

What you’ve been saying

The ghastly silence of a tumbleweed moment — letter from P G Morgan:

As a Brit who has lived in California for 15 years, I have often experienced the ghastly, uncomprehending silences that follow a British one-liner or a caustic remark. This mutual incomprehension is further aggravated when the literal-minded American replies with “That’s funny”, a response guaranteed to bring the verbal tennis match to a crashing halt.

My American wife refers to these conversational disasters as “tumbleweed moments”: a reference to the tight balls of brush that roll around the desert, searching for a home. The alternative interpretation — that I am simply not funny or remotely insightful — is too mortifying to contemplate.

Comment from Cynic in London on The unmourned death of the sellside analyst:

Both the sell side analysts as well as active managers added value because of ‘knowledge arbitrage’. They were so close to the companies and the sectors that up until ten or fifteen years ago their knowledge (not analysis) of the underlying companies and sectors gave them a competitive advantage.

However, knowledge is becoming commoditised as are analytics. Do I really need a Bloomberg or a Reuters terminal. Investment websites and blogs provide phenomenal insights. Most fund managers (especially hedgies) tell me that by the time the sell-side analysts calls them or sends through a note the information has been processed within their organisation. They tell me that small, one-man shops often send out better analysis than big houses.

The internet has killed the information arbitrage, as it has done in many other industries (newspapers, magazines etc). The future of sell-side research will probably comprise of a few big houses — cross subsidised by corporate finance — and a lot of small shops asking for direct payment. It would be interesting to see how the brokerage industry, both institutional as well as retail, reacts to this.

Asian women have traditionally held their own — letter from Lakshmi Nadarajah:

In the Asia Pacific economies, Malaysia has one of the best gender diversity scorecards. Malaysia has seen women lead the central bank and securities commission, as well as hold significant cabinet ministerial positions and become successful entrepreneurs. Women now hold in excess of 30 per cent of top management positions. Among top listed companies, women have about 15 per cent of board seats while all-male boards have reduced to below 30 per cent.

Today’s opinion

Banking union is not enough to save the eurozone Economic recovery should not obscure need for reform of Europe’s financial system

Gavyn Davies’ blog: Can secular stagnation morph into secular expansion? 

Time to step off the nuclear tightrope The only way to ensure such weapons are never used is to eliminate them

Emmanuel Macron can succeed where others have failed But he will have think strategically if he is to be a truly transformative president

Three trends to move markets in 2018 Wages and corporate spending among the topics to watch in business and economics

The Big Read: Big German banks muscle in on retail Deutsche and Commerzbank aim to win business from struggling local savings banks and co-operatives

FT View

FT View: Trump takes aim at Pakistan’s duplicity Sanctioning a nuclear armed state threatened by Jihadis is a gamble

FT View: Chip debacle shows need for emphasis on security Stress on efficiency in IT design raises the risk of a catastrophic event

The Big Read

The Big Read: Big German banks muscle in on retail Deutsche and Commerzbank aim to win business from struggling local savings banks and co-operatives

Get alerts on Opinion when a new story is published

Copyright The Financial Times Limited 2022. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article