Every new year, we envision a range of market-moving events that could occur but are far from inevitable. Here are 10 possibilities for 2017.
The good
EUROPE PROGRESSES
After Europe's torrid political environment last year, fears about its "disintegration" may end up misplaced. If political tensions fall as elections are completed, confidence could grow about a "soft Brexit" that could help investment and employment rise, which would be another important step towards a fully united Europe.
Low valuations and reduced political risks might then combine to generate good equity returns.
GREEN FUNDING TAKES OFF
Despite United States President- elect Donald Trump shifting the energy policy back towards coal and oil, global efforts to improve the quality of economic growth could accelerate quickly, thanks to "green bonds" promoting lower pollution and cleaner water and energy systems.
Despite US climate change scepticism, corporations and investors could join forces to minimise ecological damage.
FISCAL STIMULUS BOOSTS GLOBAL GROWTH
The realisation that negative interest rates were a policy error could lead to a more fiscally stimulative set of economic policies globally, which could relax the investment tension created by this distorted interest-rate environment.
European and US populism could create new spending that boosts economic activity, which would increase investment, reduce unemployment and lift confidence.
'CHINA-INDIA' CONSUMPTION TAKES OFF
With China rebalancing towards a consumption-based economy, and with reform movements converging in India and Indonesia, the world is witnessing the creation of a new consumer market with four billion people.
Incomes in Asia are expected to grow rapidly in the coming years, with the "American dream" alive and well in the south-eastern part of the region.
ACTIVE MANAGERS ADD OUTPERFORMANCE
After a generally woeful year of trying to beat the market in 2016, active managers could serve clients better by improving pricing and transparency of their funds' performance, and by aligning costs to meet client objectives.
At the same time, the so-called "free costs" or savings from passive investing could become eroded by market volatility which widens spreads, lifts interest expenses, and reveals greater illiquidity and concentration in positioning within portfolios - all of which would further detract from achieving returns that track indexes.
The bad
TRUMP INSPIRES TRADE PROTECTIONISM
True to his campaign promises, Mr Trump could introduce trade policies that indeed "make America great" - but at everyone else's expense.
The North American Free Trade Agreement might be realigned, which would hurt Mexico, cause dramatic consequences for an already collapsing Venezuela and reverberate through a recession- weary Brazil.
A stronger US dollar would, ironically, make life harder for Mr Trump.
MIDDLE EAST STAYS TROUBLED
This region could easily become more troubled than it is today. While the Islamic State in Iraq and Syria may be targeted more effectively by its enemies, the recent attempted coup in Turkey, the regional effectiveness of the Kurds, the disarray in Egypt and Libya, and the deteriorating detente between the US and Iran all suggest there may be worse to come - including a new kind of Thirty Years' War between the Sunni and Shi'ite people.
Any of these developments may well underpin a stronger oil price.
'SOLAR MINIMUM' CAUSES ANOTHER POLAR WINTER
Our sun is a key driver of global weather and temperatures, and its radiation and sun-spot activity may fall to record lows this winter.
The latest El Nino already parched many major farm regions globally, leaving them vulnerable to a truly polar winter, which could reduce upcoming harvests. La Nina seems slow to arrive this time, raising fears about rising food prices and adding another leg to the reflationary inflation cycle. Both El Nino and La Nina are climate patterns or cycles.
CENTRAL-BANK CREDIBILITY FALLS
In Japan and Europe, negative interest rates did more harm than good, including to central bank credibility. With Japan now adopting "fiscal dominance", monetary policy could begin accommodating any and all fiscal desires of governments.
With insolvent euro zone banks still at risk, the European Central Bank will do everything it takes to keep economic growth moving forward - that is, until its efforts no longer work.
FRANCE CHOOSES LE PEN
After enduring political shocks in Britain and Italy, Europe could be convulsed by the election of Ms Marine Le Pen to the French presidency. Her policies would be hostile to the European Union and Europe could remain directionless, beset by populism across the continent, confused by the complexities of Brexit and unnerved by the apathetic attentions of Mr Trump - all of which could further undermine the Nato.
•The writer is Allianz Global Investors' global strategist.
