How Many Black Swan Events Will Happen in 2017?
The year of 2016 witnessed two major black swan events, the United Kingdom's withdrawal from the European Union (Brexit) and Donald Trump’s getting elected US President. It’s likely that more black swan events will happen in 2017.
The above-mentioned two major black swan events in 2016 were beyond the expectation of many people, because they never realized that the mass of population were so dissatisfied. It seems that people were dissatisfied with the status quo in 2016. Will the situation improve in 2017? If popular discontent is not reduced to some extent, there will no doubt be more black swan events ahead.
No one knew what Trump would do before he got elected. However, people's concerns weren’t alleviated after the members of Trump Cabinet were unveiled. It is feasible to judge what Trump wants to do based on his Cabinet staff appointments. Given the fact that many of his nominated cabinet members have experience serving as high-ranking US military officials in the Middle East, and that his nominated Secretary of State is from the petroleum sector, people can’t help predicting that oil may be the common concern in the future. Oil has been the No.1 commodity imported into China in terms of import volume. A sharp drop in oil price will not only put Russia at a disadvantage, but may also trigger inflation.
Sino-us trade conflicts seem inevitable, but how far such conflict will go remains unknown. In addition to trade conflict, the Sino-us relationship is unlikely to be calm in the financial, geopolitical and military fields. The US relationship with Europe and other regions are likely to be similar. It will be fortunate for the whole world if both China and the US can keep such conflicts under control.
In terms of finance, many people speculate on how much the RMB will depreciate in the end. It will be acceptable if the RMB succeeds in depreciating without causing too much unrest. When Trump accuses China of stealing US jobs, we need to figure out whether Trump really expects the USD to appreciate a lot or the RMB to depreciate significantly?
Black swan events also happened in China. Not long ago the bond risk of Sealand Securities was reported. This incident has been smoothed over to a certain extent. However this case is simply the tip of the iceberg, with many troubles remaining to be addressed. The stock market crisis of 2015 has aggravated China's financial risks. Compared with the stock market, which has already weathered the storm, most of the risk in the bond market and housing market still remain unsolved.
Recently, China's stock market has also been influenced by the bond market. It remains to be seen whether the impact is already over or will become even bigger. If various unfavorable factors exert their influence on the Chinese stock market together, it is likely to provide a very good opportunity for investment. If there is no major adjustment, time will be exchanged for space, so that the transition from bear market to bull market will take longer.
Since China needs to address the problems accumulated during its rapid economic development over the past three decades, we must not be surprised at its economic fluctuations. Just like the US which experienced serious economic crisis at times during the course of its rise, all countries experience ups and downs in their economic development.
In terms of trade, with the United States tending to trade protectionism, China is exchanging roles with the western countries. Throughout most of its history over the past several thousand years, China was a self- sufficient manufacturing country, almost capable of meeting all its demands by itself, while the western countries were always the advocate and beneficiary of free trade. It will be very interesting if the United States further distances itself from free trade while China goes on embracing free trade policies.