2016 Financial Markets Outlook – MM #84

2016 is already here and we bring you a special outlook all dedicated to 2016: the path of interest rates, currencies, bonds, stocks and of course the slippery price of oil. Here is your guide to the new year.

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  1. Fed hike path and the dollar:  Will we get 4 hikes during the year? Not so fast, but this may already be priced in. We explore what this means for the price of the dollar.
  2. US Presidential Elections and markets: The Presidential Elections, probably Clinton vs. Trump as it seems now could have an interesting impact on markets in direct spending and more importantly in endless speculation.
  3. Are oil prices good for the US?: This is an open question given the lack of real spending and the damage to the shale industry. This topic will continue accompanying us in 2016.
  4. Euro-zone – darkest before dawn?: The monetary union has had a turbulent year politically and economically but perhaps this stimulus will have some effect. However, the continent is going towards the political extremes and we explain. Could we see a change in austerity? The Greek crisis will stay with us. We also bet on the path of EUR/USD in 2016.
  5. GBP at crossroads: The BOE seems less keen to act and the EU in/out referendum is looming above.
  6. More yen stability?: USD/JPY was relatively stable in a volatile year. Will the BOJ and the government move?
  7. China’s ongoing landing: Is China OK? Is the transition going on as planned? Measuring growth became more complicated.
  8. Indian investment star: India stands out with outgrowing China and could remain a standout in 2016.
  9. Brazil – games in Rio and in politics: South America’s largest country is in trouble all around. Will it see some stability?
  10. Oil prices: Saudi Arabia, Russia and other countries are in a race to the top in production and a race to the bottom in oil prices. The low prices endanger the Saudi regime, as its big rival Iran is about to come online. Uncertainty remains extremely high, even among those who study oil prices all day.
  11. CAD: The loonie remains vulnerable to oil prices. After a huge fall in 2015, has it reached the bottom? Not so fast, but there is hope for a softer landing.
  12. Metals: Copper, gold and silver didn’t have a great year and things still look bleak for 2016. Yet also here, not only for silver, there is a silver lining as the pendulum swings.
  13. Direction of bonds: High uncertainty could mean a volatile and exciting year for the usually not-exciting asset.
  14. Direction of Equities: After treading water in 2015, are stocks ready to head south or a repeat of 2015? Not all stock markets are born equal though.

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