As we look ahead to 2017, we face renewed market optimism, of growth and inflation as well as new uncertainties of growing protectionist policies. Trump’s surprise clean sweep win in the US elections (versus what was indicated by polls) caught market participants off guard, as most expected a Clinton victory and status quo. The overnight risk-off tone (Equity Futures down 800 points and treasuries lower by 10-15 bps) was gone by market open and had completely reversed in what many phrased as “Brexit playing out in a few hours”. Trump’s proposed fiscal stimulus, deregulation and protectionist policies are certainly pro-growth and have inflationary tendencies. Markets swiftly repriced their expectations taking the S&P500 to record highs and US 10 year bond yields to above 2.6% for the first time since 2014. However, we remain cautious as Trump’s plan does introduce reasons for optimism but with significant longer term tail risks (lower probability events with high market impact) to growth and inflation to the upside as well as downside. As a result, we could experience increased market volatility.