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The consensus is that the positive things that Trump has promised for investors will come to pass in . But will they?

Brother, can you paradigm?

The Bank for International Settlements, the central bank for central banks, posed the question “A paradigm shift in markets?” in the title of its latest quarterly report. One infers that it was not meant to be rhetorical, even though it was not answered directly, as might be expected from typically elliptical central bankers.

Clearly, the U.S. election results have produced marked changes in asset markets, with stocks, bond yields, and the dollar all higher. Those moves have been based on expectations of strong growth in the economy and corporate profits, along with higher inflation. But as for an actual change in paradigm in terms of how the economic and financial world works, that’s still in the future.

Even so, the expectations are so strong as to border on certainty that the platforms on which Donald J. Trump campaigned for the presidency will be enacted as he presented them, and promptly. To be sure, after his inauguration on Jan. 20, odds favor the Republican-controlled Senate and House of Representatives approving the Trump program—that is, assuming there are no weird upsets in the Electoral College count Monday. But there is no sure thing, no matter the odds, as this bizarre year has proved dramatically.

Those expectations are encapsulated in the forecasts for the economy and markets for the coming year, a sample of which appears in our Outlook 2017 section. After dutifully perusing the deluge of predictions that land in email in-boxes this time of year, we find a similarity that calls to mind Dorothy Parker’s acid review of Katharine Hepburn, who she said “runs the gamut of human emotion from A to B.”

The range of projections seem about as narrow, with most forecasts of gross domestic product clustering around 2% growth, after inflation. Interest rates, as represented by the 10-year Treasury note, could move somewhat higher, perhaps to 3% from 2.59%. U.S. stocks should provide returns in the mid-single-digit percentage range, with a modal estimate for the Standard & Poor’s 500 index of 2400 by New Year’s Eve 2017, from 2258 on Friday.

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This tight consensus, envisioning such benign outcomes, recently moved not one, but two sage market observers—David Rosenberg, Gluskin Sheff chief economist and strategist, and Doug Kass, head of Seabreeze Partners—to invoke Rule No. 9 of Bob Farrell, Merrill Lynch’s legendary former market guru: “When all the forecasters and experts agree, something else is going to happen.”

After a year that featured not one, but two electoral shocks—Brexit and Trump—both of which stunned the markets and initially sent them sprawling, such certainty seems surprising, at the very least.

What’s especially striking is the absence of uncertainty evident in various risk measures. The CBOE Volatility Index, or VIX, which measures premiums on S&P 500 options, hovers near the year’s lows around 12; that indicates buyers of put options, which hedge against price declines, are loath to pay up for downside insurance.

That serene confidence also is evident in the high-yield bond market, where investors are settling for 4.2 percentage points in extra yield over Treasuries as compensation for the risk they bear, according to the Bank of America Merrill Lynch Master II High Yield Index. That’s less than half the 8.64 percentage points they demanded last February amid the slide in energy and other commodity prices, which imperiled the balance sheets of many highly leveraged producers of oil and metals, and the least since September 2014.

The consensus also assumes a President Trump will follow through on some of his plans on Day One of his administration, at least those that don’t need congressional approval. Among them is to declare China a currency manipulator for allegedly pushing down the yuan to gain an advantage for exports.

The Chinese currency has been weakening steadily, nearing the psychologically important mark of seven to the greenback. In that regard, the yuan is hardly alone in losing ground to the surging dollar, which has gotten a further boost from the Federal Reserve’s one-quarter percentage-point interest-rate hike last week and its announced expectation of three more such moves in 2017. Compared to the currencies of its other trading partners, however, China’s yuan has been relatively stable.

China also hasn’t fulfilled all of the U.S.’s four criteria to be declared a currency manipulator: at least $55 billion in trade with the U.S. a year, a $20 billion trade surplus with the U.S., a current-account surplus equal to 3% or more of GDP, and purchases of foreign assets equal to more than 2% of GDP. On the latter score, China has been dumping its foreign-currency assets, notably U.S. Treasury securities. According to the most recent Treasury Department data released last week, Japan has supplanted China as the largest foreign holder of Treasuries.

China, in fact, has been liquidating foreign assets at a rapid pace to stabilize the yuan, or at least slow its descent—precisely the opposite of accusations that Beijing is pushing it lower. The Chinese monetary authorities are fighting capital flight, as individuals try to get their legal $50,000 a year out of the country and businesses make acquisitions, in no small part also to move money abroad. The result has been akin to a bank run, with Chinese government bonds crashing last week, forcing a halt in bond futures trading, amid the slide in the yuan.

China also puts great symbolic importance in the yuan’s being added to the International Monetary Fund’s Special Drawing Right, which officially took place on Oct. 1. With its currency reeling despite its support, being accused by Washington of manipulating it in the opposite direction would be an affront to Beijing.

At a gathering of some high-powered investment minds last week, one in attendance suggested such a scenario could provoke a confrontation in the South China Sea to test the new Trump administration. Events on Friday seemed to overtake such speculation after a Chinese warship seized an underwater survey drone used there by a U.S. Navy oceanographic survey ship.

Such geopolitical disturbances aren’t discounted by the serenely confident markets. They also assume that Trump’s fiscal plans will sail through Congress almost immediately, especially his tax cuts, which have substantial support among Republicans, who control both houses. The possibility of opposition from staunch deficit hawks to either tax cuts or an increase in the federal debt ceiling, which will be needed in a few months, falls outside the consensus.

Another possibility raised at our gathering: Some GOP stalwarts may push a Supreme Court nomination to fill the vacancy left by the late Justice Antonin Scalia as a first priority. That could delay any fiscal action, which might mean no stimulus would be felt until perhaps 2018, and doesn’t figure into the 2017 relatively rosy outlook.

One other possible skunk that could ruin the bulls’ picnic could be a renewed swoon in oil prices. A year ago, as noted, crude prices were in near free fall, which threatened the solvency of much of the junk-bond market and other lenders to the energy sector. Since oil has returned to the $50-a-barrel range, the stock and high-yield bond markets have recovered, with equities hitting records and the Dow Jones Industrial Average nearing the 20,000 mark.

Saudi Arabia’s agreement to produce just over 10 million barrels a day, from a peak of 10.7 million in July, has been key. One motivation might be to bolster oil stocks, as the Saudis prepare their initial public offering of shares in Aramco, which could be the biggest IPO in history. Whether the Saudis would continue to curb output—and with it, much needed revenue—once the IPO is placed is another question raised at this salon. As the past couple of years have shown, as goes crude, so goes the stock market.

None of these developments qualify as black swans, to be sure. But looking ahead to 2017, there seems to be heady anticipation that the positives promised from November’s elections will come to pass, and quickly. Yet the record of 2016 is that what was expected didn’t happen, and what couldn’t happen, did. That suggests risks ahead—and opportunities for those ready to pounce on them and having the cash to do so.

ANOTHER POSSIBLE SURPRISE: The tax exemption of municipal bonds could be targeted as an offset to the cost of the Trump tax cuts, according to a public-finance lobbyist at a recent conference quoted by Bloomberg. Munis’ tax exemption is projected to cost the Treasury about $420 billion between 2017 and 2026, relatively small change in Uncle Sam’s couch cushions.

Munis have fared poorly in the bond selloff, since tax cuts would reduce the appeal of tax-free income. That has gone too far, as colleague Amey Stone quotes John Mousseau, head of fixed-income investing at Cumberland Advisors in Sarasota, Fla., in Barrons.com’s Income Investing blog. Long-term munis with double- and single-A ratings are yielding 4% to 4.25%, more than comparable Treasuries, even without the tax advantage. “These yield levels need to be embraced,” Mousseau writes rather passionately. Muni yields also tend to fall, relative to those of taxable bonds, in a rising-rate environment, he adds.

Much of the rise has been due to bond-fund redemptions, which probably also has been spurred by tax-loss selling. Even harder hit have been closed-end muni funds, which Amey also reported were upgraded last week by Stifel Nicolaus analyst Alexander Reiss, who presciently downgraded a bunch last August near their peak prices. Sell high, buy low—a concept that could catch on in 2017?

The yen and yuan will fall further, supporting both Tokyo and Shanghai stocks. Sony looks attractive.

In 2017, conversations about Asia will be dominated by the Japanese yen and the Chinese yuan, as Asia’s two most important currencies continue their race to the bottom. We think the falling currencies will provide opportunities in both the Nikkei and China’s A shares.

Morgan Stanley, which made the correct—and contrarian—bullish call on the yen a year ago, now sees the currency weakening all the way to 130 per dollar by the middle of 2018. The yen has fallen by about 12%, to 118 to the dollar, since Donald J. Trump won the U.S. presidency, but it has room to fall further. Driving the yen down will be the countries’ divergent rate policies. The yield on the 10-year U.S. Treasury will be pushed up to 2.75% in 2017 from about 2.56% last week, while the Bank of Japan will continue to buy bonds to keep its benchmark 10-year Japanese government bond yield at 0%, argues strategist Jonathan Garner. Morgan Stanley sees the U.S. Federal Reserve following last week’s rate hike with five more, pushing the federal-funds rate to 1.875% by the end of 2018 from last week’s 0.625%.

A weaker yen is good news for export-oriented Japan. Companies listed on the broad Topix stock index get about 40% of their revenue from overseas, so a weaker yen could propel the Topix to 1800 by the end of 2017, or roughly 17% above last week’s level, says Garner. Morgan Stanley expects Japanese companies to grow earnings by 28% in 2017, redeeming a bruising 16% slump in corporate profits this year.

Burned by ineffective central-bank policies, foreign investors on balance sold $37 billion of Japanese stocks in 2016, in effect canceling all of their purchases since 2013. But they’re heading back. The latest Bank of America Merrill Lynch survey shows that institutional investors’ allocation to Japanese stocks jumped from net 5% underweight in November to net 21% overweight in December, a U-turn since Trump’s victory. In the past month, foreigners net bought over $14 billion of Japanese stocks. The iShares MSCI Japan exchange-traded fund (ticker: EWJ) returned 6.8% in 2016. Morgan Stanley now favors Japan’s exporters and is bullish on cosmetics maker Kose (4922.Japan), Sony (SNE), and Sumitomo Mitsui Financial Group (SMFG).

Garner, who downgraded Chinese stocks in May 2015, just ahead of Shanghai’s spectacular summer crash, thinks that China’s mainland market is “re-entering a bull market.” He expects the Shanghai Composite Index to hit 4400 next year, which would be a 40% gain in yuan terms. Garner’s reasoning is simple: Individual investors’ money has to go somewhere. As the government curtails the property bubble, retail capital will be drawn back into stocks. Individuals already own more than 40% of mainland stocks.

China’s onshore markets are quieter these days, but bullish spirits are still alive. Both the Shanghai and Shenzhen markets trade at a 30% premium to their five-year averages, “a major difference in comparison with the prolonged bear market of the 2010 to 2014 period,” says Garner. In addition, corporate China seems to be recovering, with producer price inflation recently hitting a five-year high. Morgan Stanley expects corporate earnings to grow by 7% in 2017, versus a 9% decline in 2016.

We shouldn’t expect another fast and furious run in Shanghai like the one in the spring of 2015. The government is now more vigilant in restricting trading excesses. For example, Beijing this month cracked down on what it called the “barbaric” practice of insurance companies borrowing money to buy blue-chip stocks. New limits sent a rallying market down 5%. Clearly, the government wants measured increases, and that’s what investors should expect.

BY COMPARISON, Morgan Stanley is more cautious toward Hong Kong and U.S.-listed Chinese stocks, because of the yuan. Unlike Japanese exporters, publicly listed Chinese companies are mostly domestic and unaffected by the dollar. And unlike in mainland China, Hong Kong and other foreign-listed Chinese companies make money in yuan but report earnings in dollars. (The Hong Kong dollar is pegged to the U.S. dollar.) Since Morgan Stanley sees five more rate hikes, it thinks the U.S. Dollar Index could hit 109 by the end of 2017, from 102.8 now. As such, the bank forecasts that the yuan will weaken further, from 6.96 to 7.30 in 2017 and 7.43 in 2018.

Going “naked long” on U.S.-listed companies such as Alibaba Group Holding (BABA) is dangerous, says Junheng Li, founder of China research firm JL Warren Capital. She notes that Chinese companies use the yuan’s current spot rate when forecasting 2017 earnings, so they could miss guidance quarter after quarter if the yuan gets weaker.

In the mainland China market, Morgan Stanley favors Spring Airlines (601021.China), hydropower generator China Yangtze Power (600900.China), and drugmaker Jiangsu Hengrui Medicine (600276.China).

Companies with a U.S. footprint, including British American Tobacco and Inditex, could have a strong 2017 if local currencies stay weak.

The outlook for European equities is surprisingly bright going into 2017, given the political clouds gathering around the euro zone and the broader European Union.

With at least three general elections in the offing amid surging support for anti-establishment parties and the United Kingdom’s slowly unfolding Brexit drama, investors might be expected to head for the hills. They shouldn’t.

The Stoxx Europe 600 index is widely forecast to fare better next year than its 1% loss so far in 2016. More telling is its performance over the past three months, when it has risen 4.7%, fueled by improving economic indicators. While most economists currently expect the euro zone’s gross domestic product to loiter around the 1.4% annualized growth rate it notched in the third quarter, investors have been buoyed recently by better-than-expected data, including encouraging purchasing managers’ activity and retail sales figures. Consensus forecasts put the Stoxx index at around 381 at the end of 2017, a gain of 5.8% from the current level.

Jie Zhang, an associate director at asset manager Signia Wealth, says political uncertainty will boost volatility and offer bargain-hunting opportunities for active investors. “Given current valuation levels, once political uncertainty is removed, European equities have lots to offer on the upside,” says Zhang. The forward price/earnings ratio for the Standard & Poor’s 500 is 19.1 versus 16.4 for the Stoxx.

Indeed, Europe’s political backdrop may not be as daunting as some fear. Italy replaced Prime Minister Matteo Renzi with a moderate who could stave off new elections that might otherwise boost the influence of the anti-EU Five Star Movement; the Netherlands’ potential election of an anti-immigration candidate in March is likely to result in a coalition of centrist parties; France’s anti-EU National Front leader Marine Le Pen may make it to the second round of the country’s presidential election in May but isn’t expected to win; and despite challenges, Chancellor Angela Merkel’s party and its affiliates continue to outpoll other German parties, making it likely they would be involved in any coalition government after September elections.

Gerrit Smit, who manages the U.K.-based Stonehage Fleming Global Best Ideas Equity fund (ticker: STGBIEB.Ireland), says the global economic outlook is positive, with expectations that U.S. President-elect Donald J. Trump will boost infrastructure spending and with the continued strong growth in some Asian economies—all of which should be supportive of European equities.

In particular, Smit says the weakness of the euro and the British pound against the dollar, combined with market volatility caused by geopolitical uncertainty, presents investors with stock-picking opportunities. He recommends investing in European companies that benefit from having a euro or sterling cost base but generate income from stronger currencies, especially the U.S. dollar. On Thursday, the euro touched $1.043, its lowest level against the dollar since 2003, after the Federal Reserve said it was raising interest rates.

Smit’s choices include Britain’s Wolseley (WOS.UK), which, despite its London listing, has a strong U.S. presence as a supplier and distributor of building materials. It would profit from more infrastructure spending. He also likes FTSE-listed Diageo (DEO), the world’s largest spirits maker and a major U.S. exporter.

Another beneficiary, says Smit, is British American Tobacc o (BTI), which will benefit if its $47 billion offer for the 58% of Reynolds American (RAI) it doesn’t already own goes through. That would give it a solid U.S. footprint.

IN THE EURO ZONE, Smit recommends the Spanish parent of fast-fashion store Zara, Industria de Diseno Textil, or Inditex (ITX.Spain), which he says has a competitive edge due to its rapid response to new trends and flexible delivery options, whether in-store or online. “They’re extremely competitive, and you can just imagine the success they could have now as a global business with quite a low euro cost base,” he says. “They may have really good results in 2017.”

Rob Lutts, chief investment officer at U.S.-based Cabot Wealth Management, says international investors might never have been as wary of European stocks as they are now. As a result, valuations are especially attractive in some sectors.

He favors the financial sector and recently invested in the iShares MSCI Europe Financials exchange-traded fund (EUFN). “When I buy an ETF, I take the top 10 holdings and really look at the individual companies and try to understand what their risks are,” says Lutts. “I know that in any bank it’s hard to understand all of the risks, but they’ve been working for quite some time to clean up their balance sheets, and get a little stronger, and they warrant a higher valuation than they have today. You could get the European banks to go up 15% or 20% and not have any improvement in the fundamentals, just an improvement in psychology.”

Sentiment will improve—for banks and lots of other sectors—if Europe manages to get through a fraught political year without too many surprises.