Horizons newsletter – Week 1 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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Seeing it is believing it
Last year can be characterized as a year of shock. Disbelief became widespread; about the Brexit vote, the election of Donald Trump and a whole range of revolts that took place in 2016 from Turkey to the Philippines to Italy. These events challenged long-held beliefs about the order of the world and the commitment of countries to globalization and international alliances. As shocking as these events were, their impact so far has been modest. This is because the true changes have yet to be implemented. These will take place in 2017. Then we will learn what Brexit will really look like, what will be policy, what will remain rhetoric when Donald Trump assumes the presidency and whether Italy will have elections that year. Moreover, it will become clear how powerful the force of populism is and whether it will spread from the Anglo-Saxon world to the European continent with crucial elections in France, the Netherlands and Germany. Thus in 2016 we realized that the world has changed, but in 2017 we will learn what the consequences of these changes will be.
2017: The Year of the Test as Monetary Policies Diverge and Politics to the Fore
The year 2017 will be about testing the market; worldwide the divergence in monetary policies will create changes in capital flows and can increase stress levels. Europe’s string of elections will test the Euro, bond yields and banks – Italy in particular must address the bad loan problem at its banks. China’s CCP face the difficult tasks to further deleverage (industrial) debt positions, and manage currency weakness and capital outflows. But most focus will be on the U.S. where the impact of ‘Trumponomics’ on inflation and the reflation trade are closely followed. Key drivers for U.S. equities are a possible reduction of the corporate tax rate and reform of the tax code in respect of the repatriation of U.S. corporate earnings held abroad. The question will be how fast political risks can be digested by capital markets. If 2016 is any indication, it will take much to shake the market: it took several weeks to recover from Brexit, a day from Trump, and several hours from the Italian referendum.
What have we (deep) learned from 2016?
In 2016 deep learning enabled tech companies such as Amazon, Microsoft and Google to improve the accuracy of voice and image recognition. Our daily use of next gen cameras and voice interfaces provide these companies with rich sets of data. Their 2017 challenge will be to harvest relevant insights from this information that will further advance the performance of their services by taking a new step in machine learning. Advanced machine learning may give rise to intelligent devices and services. Robots, drones and self-driving cars will leverage artificial intelligence and machine learning to interact with humans and their surroundings and virtual personal assistants may transform our work environment. By now our smartphone is able to distinguish between the pictures of our dog and the ones of our cat. By the end of next year, our robot dog will obey when you tell him to stop chasing the neighbors’ cat.
