2017 in Review

Happy New Year, hope you had a good holiday.

A few questions for 2018:

  • Will equities continue to rally?
  • Similarly, will the yield curve invert and herald the next recession?
  • Whatever happened to inflation?
  • What forces will dominate oil prices in the upcoming year – Saudia Arabia/OPEC, shale production, alternative energy, or something else?
  • What effect will tax reforms really have on the market?
  • What will end the credit rally?
  • Bitcoin?
  • More broadly, which cryptocurrency will become dominant?

 

When looking to the future it helps to sum up the past. We’ve put together a selection of broad market visualizations for you to peruse. Volatility was predictably low (see distributions below correlation matrix). Equities went gangbusters. The curve flattened.

Securities included * :

SP500 – S&P 500 index (not total returns)
WTI – West Texas Intermediate Crude Oil
Brent – Brent Crude Oil
Gold – Gold, Fixing Price in London Bullion Market
HH NG – Henry Hub Natural Gas
Bitcoin – Bitcoin Prices from Kraken
VIX – CBOE Volatility Index
LIBOR – 3-Month London Interbank Offer Rate

* Unless otherwise noted, data is from FRED

 

 

S&P 500, WTI, Brent, Gold, HH NG, Bitcoin

Data is daily percent change for the given year with 2017 in green and 2016 in grey. All graphs are normalized; axes are the same scale for comparison. Extreme values are binned into the outermost values (visible in Nat Gas and Bitcoin).

VIX

Data is daily change for the given year with 2017 in eggplant and 2016 in grey.

Fixed Income

Data is daily change in yield (basis points) for the given year with 2017 in blue and 2016 in grey. All graphs are normalized; axes are the same scale for comparison. Extreme y-values near the middle (zero) are cutoff for dramatic effect.