Around The World in 100 Words - January 2017 - Week 3

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Melania Trump's Dress Predicts a Volatile Time ahead in 2017

Fashion is big business, but this is the first time Around The World has covered (pun intended) the issue of what (if anything) fashion tells up about the economy and capital markets going forward. There's this theory called the Hemline Index, that reasons that in good times women’s hemlines rise and drop when stock prices fall. Incredibly, there IS historical evidence of this which I find interesting. So what does the dress Melania Trump wore on the day her husband was elected President say about the outlook for 2017?

 

Well, it was a swag cut, which was long on one side and short on the other. It was both a miniskirt and a full length dress and seems to be signalling is a high degree of uncertainty about the future. But volatility does not mean down, it is a double- edged sword where there are both risks and opportunities.

 

So Melania's dress signals that we are in for greater volatility, but say nothing about direction. Now skirts are not the only indicator, fashion designers channel the zeitgeist. So when you see dresses going both directions at the same time, combining that with traditional economic analysis can be helpful in positioning portfolio allocation. Then again, the stream of politically and economically charged Tweets coming from Melania's husband is creating the volatility that the dress seems to be pointing to.

 

So it's a Chicken and Egg thing, but we'll save the analysis of which came first and what it means for the global economy and capital markets for a future Around The World blog. Now that's a certainty you can plan on!