Gazing into the crystal ball for 2016


With just a few weeks left in 2015, this a good time to think about 2016.

With that, we present 10 predictions for what we think may happen in the coming months.

 

2016-market-predictions

 

 

Euro

The euro will break parity with the US dollar. The easing of interest rates and continued quantitative easing (QE) by the European Central Bank will spur a further weakening of the euro.

 

Rates

The Federal Funds Rate will hover around 50 basis points. The Fed will increase interest rates in December as expected. However, weakness in the world’s economies and the US presidential election will make the Fed wary of increasing rates in 2016.

 

Oil

Oil prices will go above $60 per barrel. With Iranian production coming on line, oil prices will be under pressure at the beginning of the year.  With continued weakness in the price of oil, the Saudis will have to rein in their production.

 

Treasuries

The 10-year Treasury Bond will yield 2%. With the Fed on hold and negative interest rates in Europe, the 10-year will rally and finish the year at or below 2%.

 

US Economy

The US economy will grow less than 2%. US GDP growth will slow in 2016 as consumer spending begins to run out of steam.

 

Inflation

The US inflation rate will stay below 2% in the US. A sluggish economy and strong dollar will keep inflation in check.

 

Gold

Gold prices will go below the $1000 per ounce mark. With a strong US dollar and little to no inflation, gold will continue to decline and break the $1000 for the first time since 2009.

 

Emerging Markets

Emerging markets will outperform in 2016. With a strengthened dollar and the low interest rate environment in major economies, emerging markets will turn around and have the best performing stock markets.

 

US Stocks

The S&P 500 Index will be flat for 2016. Global markets will be volatile. In this environment, the S&P 500 Index may find it difficult to gain traction to go higher, but there will be enough stimulus to prevent a decline.

 

US Election

Get ready for Hillary Clinton vs. Donald Trump in the general election. This will make for entertaining debates and get people involved in the election. Since demographic trends are stacked in favor of the Democrats, she shall win with the same Electoral College edge in votes as President Obama did in 2012.

Looking forward to a happy and healthy 2016! Have a wonderful New Year.

 

Photo Credit: Valerie Everett via Flickr Creative Commons

 

Certain of the information contained in this article is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Covestor believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
 

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Mott Capital Management, LLC
Mott Capital Management, LLC
Mott Capital Management uses a long-term thematic growth approach to investing in equities. We search for investments that both reflect and help to shape generational and demographic shifts. Mott uses a philosophy of buying these companies for a 3- to 5-year time horizon, with the belief that a long-term holding period gives themes and our chosen companies a chance to fully develop. In our view, the long time horizon also serves to mitigate the risk associated with the short-term impact of market volatility.