A decade following the Great Recession, developed markets are set to return to the "old normal." With the first interest rate hikes at the Bank of England and the ramp up in hikes at the Federal Reserve, central banks are signaling, "growth is back." While the European Central Bank has yet to raise rates, it is also signaling European markets are ready for higher rates by tapering bond buying, de facto raising the cost of money.

Across the pond, the recent tax bill signed into law this past week by President Trump will help alleviate rising financing expenses and give the Fed even more room to tighten in 2018. The question now is when is tight, too tight? Tightening past the equilibrium level of interest rates or the "natural rate" will cause a slowdown in markets and trigger another major recession. All eyes will be on the Fed and it's speed of raising rates to deal with as-of-yet tame inflation.

The new tax code will likely cause an increase in income inequality with corporations rewarding upper management with the lion's share of tax savings before spreading the remainder with employees. This will mean less disposable income for the masses and not enough "trickle-down" income for households to consume. Lower consumer consumption will trigger the next recession, and we start the process all over again. These are the reasons why I think the Fed will be unable to raise rates three times in 2018. While lower rates mean a lower dollar and cheaper commodity prices, ceteris paribus, emerging markets will only benefit if the impending U.S. economic malaise is brief. A major shock anywhere in the world will cause a "flight to quality" and all developing markets will suffer.

Any major shock will most likely come from unorthodox policies, and more importantly, perceptions of those policies, of Trump. While Trump promised radical reforms and a "draining of the swamp," he has seemingly wholeheartedly embraced the Washington elite and their agenda. His single greatest legislative accomplishments cut health care for the poor and rewarded corporations with permanent tax cuts. While populist in campaigning, Trump's execution has done nothing to benefit those that elected him. Perhaps the psychological effect of repeating "Make America Great Again" is like a placebo and makes his voters believe they are better off even if they are financially far worse off? The European Central Bank's ability to raise rates won't make sense until its bond buying program ends, which means there won't be an ECB rate hike in 2018. Despite their quantitative easing, the euro keeps appreciating and making Euro denominated exports more expensive to buy. Any rate hikes would only exacerbate the situation. This is good news for exporters to the eurozone, such as Turkey, but bad news for eurozone exporters and their workers. Oil, already at 30-month highs, will most probably not be able to sustain higher levels and retreat, but every day they don't is bad news for energy importers like most European countries, including Turkey.

How much of a role the new U.S. administration played in finishing off ISIS is unclear; however, its decimation and the post-ISIS recovery process in 2018 will impact the economies of the Middle East as much as any fiscal policy news out of Washington. With over five million refugees currently being hosted in Turkey, Jordan, and Lebanon, the lifting of said financial burden and the subsequent rebuilding of Syria will help all economies. With a pickup in trade to follow, a rebuilt and rejuvenated Syria may be the biggest development of 2018.

Finally, Bitcoin. I wrote an article in August declaring that "Bitcoin is too good to be true," and I still believe that. Bitcoin and blockchain technology are not the same thing. While we may find uses for blockchain technology with actual value in 2018, trading Bitcoins is currently not one of them. At present, Bitcoin has no real value. It's difficult to buy something with Bitcoin as no one is selling and even more difficult to sell something with Bitcoin because no one has Bitcoins to spend. "Cashing in" Bitcoin will become increasingly more regulated and will ultimately burst this bubble. By the end of 2018, Bitcoin may very well be worth a fraction of its current value. While it was a pioneer in the cryptocurrency space and really took off in 2017, 2018 will mark its demise. Here's hoping 2018 will be full of peace and prosperity for all!