Key Takeaways As we mentioned in last year’s Outlook, forecasting is difficult under the best of circumstances but particularly so in the last innings of an eight- year-long economic expansion and bull market. This year brings the additional challenge of a new president whose policies are likely to follow an unconventional script. Nevertheless, there are seven key takeaways from our 2017 Outlook: ¢ Improving growth: We expect global economic activity to accelerate this year, with modestly higher GDP growth rates in the US, Eurozone, Japan and many emerging market economies. We expect a small slowdown in China. ¢ Low recession risk: Favorable monetary and fiscal policies substantially reduce the probability of a recession in key developed and emerging market countries. ¢ Still accommodative monetary policy: US monetary conditions will still be relatively easy because of the slow and steady pace of tightening of the federal funds rate by the Federal Reserve. At the same time, other developed central banks are still expanding their balance sheets. e¢ Remain vigilant: Despite a favorable economic and policy backdrop, there is no shortage of global risks, including rising populism in Europe, growing geopolitical tensions, the spread of terrorism and the proliferation of serious cyberattacks. ¢ China concerns: China is the biggest source of uncertainty given its growing debt burden, accelerating capital outflows and potential for a notable deterioration in the US-China relationship driven by changing US trade and foreign policy toward China. e Stay invested: The collective impact of these various risks is not yet sizable enough to undermine our core view: that we are in a longer-than-normal US recovery that supports equity returns, which are likely to exceed those of cash and bonds. Thus, we recommend staying invested in US equities with some tactical tilts to US high yield bonds and European equities. e¢ Modest returns: While we recommend clients remain invest