2017 starts

Markets are starting a new year. The US markets look to be opening higher, oil has hit a high not seen since the middle of 2015, and the dollar is rallying. The news is talking of a lot of the news that could de-rail the current rally, and while there is merit to it the factors to watch can be boiled down to a few data points.

• US Dollar: The trend of the dollar has the ability to exacerbate many of the issues that are festering in the markets now. From capital flight in China to the decline of US multinational companies' revenue, a sharp rally or decline will have an affect around the globe.
• Chinese debt: Corporate sector debt in China has been a worry over the past year, but the government has found ways to curb speculation in a way that didn't shock the market like the end of 2015. This year more will have to be done to limit capital flight out of the country and manage the large debt load. Whether through government intervention or defaults, the steps taken (or not taken) by the government will dictate how the deleveraging will occur and how global markets will be affected.
  
• European elections: More of a slow burn in 2017, the elections will determine if the status quo of the EU will remain intact. If euro-skeptics get a majority it would break the social contract that has kept the Eurozone together in terms of bailouts, austerity, and immigration.
  

​As a partial hedge against this, you can look to invest in emerging markets with good growth prospects and healthy debt profiles (not China) to take advantage of the dollar decline potential, higher yielding assets, and lower stock valuations. Taking gains and buying value (not to mention taking a longer term view) are the only other safe plays so far this year.