Debating the “What Ifs” of 2016
Today we are discussing the rippling effects of 2015 and the “What Ifs” of 2016 that could impact the markets in 2016 and your portfolio this year.
This week we will be sending out a letter exclusively to our clients taking a deeper look at three major themes we are watching in 2016: Women, Wealth, and Wireless.
China caused a lot of volatility last year and so far we are seeing that they are not starting out great in the markets in 2016. However, China does not really have as many investors in the market as we think they do and may not have the impact that everyone says. Could they really impact the USA? It is a global economy, and Canada is our number one trading partner, but China is a close second. In our global economy when China shows weakness investors worry. However, in 2015, with the weakness in China we saw the commodity prices come down which helped the US consumer.
With the major drops we saw in oil prices in 2015 we may see in 2016 that they don’t have to fall any more and the consumer can reap the benefits of the ongoing savings. However, we still think oil prices will most likely continue to drop. This could set us up for commodity deflation but consumer price inflation. This would get people spending and could lead to US economic growth. Consumers spending more as a result of the lower oil prices could be the tailwind in 2016.
One of the women in our three major themes that could impact the markets in 2016 is Janet Yellen. Will she be able to raise interest rates? The market is showing that there will be two interest rate increases, but the Fed said that they would do four. There is no agreement on this right now. We will have to continue to watch everything Janet Yellen says.
The Jobs Report comes out on Friday. This will give as idea starting the year off knowing where the jobs numbers are and could give us an idea where the economy is going. Also, the dollar continues to move up, giving the US great purchasing power. With China doing markdowns this creates some interesting dynamics.
The US can now export oil. One of the themes in the markets in 2016 will be how this now effects the dynamics of the Middle East, as well as the energy business. Everyone expected US oil production to collapse because of the low prices in 2015 but it hasn’t and now we are exporting. We will now be watching to see which of the global producers crack.
US Presidential Election
Another one of the women we are watching is Hillary Clinton. She most likely will now have the Democratic nomination but there is still some uncertainty with the Republican nomination. It is also unclear at this point what the issues will be and how they will impact the markets in 2016. We know the rhetoric will be built around Hillary. It will either be Hillary’s policies or how the Republican nominee is responding to her policies. This rhetoric will push the market and hopefully create opportunities. The political candidates actually have no power right now but the market moves with the rhetoric and the comments of the candidates.
Where there is chaos there is opportunity. Where there is change there is opportunity. As we go into 2016 we are thrilled that everybody is more pessimistic. In 2015 many people went in overly optimistic which didn’t end well. Going into 2016 more pessimistically we may see more positive changes and we could potentially have the chance to take advantage of some opportunities resulting in a very good year.
We hope today’s video creates additional thoughts and questions and we look forward to sharing more information with you on each of these topics.
We wish you a very happy and prosperous 2016!
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Greg Powell, CIMA
Email Greg Powell here
Ashley Page, JD, MBA
Senior Vice President
Email Ashley Page here
Bobby Norman, CFP®
Email Bobby Norman here
Trey Booth, CFA®
Email Trey Booth here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
Stock investing involves risk including potential loss of principal.
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