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This List from Deutsche Bank Gives 30 Market Risks to Watch in 2018

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As 2017 has rolled by, many headlines have documented new economic upsurges. U.S. stocks saw record growth, foreign equity markets rose in value, and domestic unemployment fell to its lowest rate since 2000.

Then tax reform legislation was passed, and now optimism is growing for what the New Year may hold. Nonetheless, while all of this is positive, a number of market risks could reverse the growth trends of 2017.

In a recent Global Markets Research report, Deutsche Bank mentions 30 potential game-changers that can influence the economic landscape in 2018 – and even bring market reversals. As you review your financial picture for the New Year, here are some important risks of which to take note.

What Risk Factors Made the List?

Torsten Slok, chief international economist for Deutsche Bank, put together a list of significant risk factors for 2018. From a U.S. equity market correction to the Russian presidential election and the effects of a reversal of Brexit, the list included upside and downside factors.

Slok mentioned that a crash in the pricing of Bitcoin could 'spill over' into domestic equity markets. While Bitcoin has reached price highs, experts noted that there have been wild price swings. Moreover, the question of how Bitcoin might be regulated could prove to be influential. Overall, a Bitcoin crash could prompt investors to lose market confidence and, as a result, lead to equity selloffs.

The dynamic European landscape also proved influential. Slok pointed to geopolitical risks, like emerging Brexit developments and even Brexit being reversed. Across Europe, a number of other electoral factors were featured. That ranged from Italian elections and a potential UK government shake-up to even upcoming Irish presidential elections.

Central banks also made the list. Slok called out looming tests of leadership for the incoming Fed chairperson, Jerome Powell. The Bank of Japan may see a leadership change and with it a change in its current yield curve control policy. Then the European Central Bank could signal a departure from its quantitative easing policy in the second quarter of next year, Slok said. 

Real estate was another area that Slok said investors should watch. He pointed to the possible bursting of housing bubbles in Australia, Canada, Norway, Sweden, or China. 

One item on the list didn't need much elaboration: "North Korea." In an interview, Slok said that an escalation of the conflict between North Korea, the United States, and other nations could definitely a risk factor for market swings in 2018. 

What about in the United States?

In the U.S., a broad range of risk factors made the list. Those included:

  • Outcomes of the ongoing Mueller investigation
  • The growing mismatch of valuations and fundamentals in U.S. equities
  • Mass-investor responses to a U.S. market correction
  • More populism and electoral uncertainty coming from the growing inequality in the United States
  • Outcomes of midterm U.S. elections in 2018


Overall, the complete list of risk factors, as forecasted by Deutsche Bank, can be seen below.

30 Market Risks for 2018 Deutsche Bank

Preparing for Your Financial Future

Life doesn't follow a straight path. Whether you are nearing retirement or already there, your financial plan should match your needs, goals, risk tolerance, and situation. As you evaluate your portfolio's health and your financial progress, it's important to assess whether your plan needs adjustments.

If your psychological appetite for market risk has changed, a new diversification strategy may be in order. A financial professional can help you assess your risk appetite and develop a tailored plan that aligns with your tolerance, as well as your overall financial picture.

For those of us approaching our retirement years, a financial plan should account for how to preserve what we have spent years building and saving. Investors will need to plan for how they will receive income and maintain their lifestyles over a long-term retirement outlook.

Need Personal Guidance?

If you need guidance, or you could benefit from a secondary review from a financial professional, help is just a click away. Financial professionals stand ready to help you here at SafeMoney.com.

Use our "Find a Financial Professional" section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723. Happy holidays to you, and our team looks forward to helping you however we can. 

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