2016 is Coming – What Are Analysts’ Investment Predictions?
It’s the time of year when market analysts and brokerage firms begin to project what they see coming for market trends in the New Year. Volatility experienced throughout 2015 in stocks and markets in general makes for interesting commentary in reviewing the opinions of the most experienced minds in the investment community.
Respected Wall Street strategists are for the most part in close consensus that 2016 will be a year of moderate gains with a continuing trend of volatility in S&P 500 markets. US financial experts are anticipating that interest rates will be increased by the Fed resulting in a stronger US dollar. They also expressed their doubts that 2016 will experience a recessionary period, although EPS will likely be limited to a rather subdued 4% increase.
Notable exceptions to this generally flat or meager financial outlook:
RBC Capital Markets predicts “stabilizing commodities” that will include a higher dollar that results in “a substantially higher earnings trajectory as well as a modest re-rating of stocks”.
Contrary to RBC’s perspective is that of BMO Capital Markets who opine that “the S&P 500 will likely suffer its first calendar year loss since 2008”, although analysts softened that thought with “we continue to believe the longer-term outlook for US remains bright…”
Deutsche Bank dropped their expectations for S&P EPS from $128 to $125 for 2016, while adding that “This trimming shouldn’t surprise investors given recent commodity and currency markets”.
What Other Factors Influence Investment Predictions?
Global political unrest and terrorism continue to impact consumers and governments. Recent attacks in Paris and the resulting focus on immigration policies and even the plight of refugees from war-torn countries can have far-reaching economic impact on European countries. This is expected to have an effect on consumer spending habits and can also have a negative impact on travel and tourism to countries where such attacks have already occurred or may be viewed as especially vulnerable to such incidents.
China’s weak economic conditions are still a cause for concern by analysts, as well. Heavy debt and declining population are but two factors at work creating a recessionary environment that will have global impact due to China’s reach across other economies.
Low energy costs spurred by cheap oil in the $40/barrel range are likely to take an upturn in 2016, with some analysts predicting they will settle around the $60/barrel mark. Energy costs always have an impact on consumer spending due to increasing or reducing expendable income, and 2016 will continue that trend.
Aging population is becoming a factor for investors. As baby boomers continue to retire their spending will be reduced and investing habits will shift to more secure investment vehicles with less risk but lower returns. Millennials may be the generation to watch for investment opportunities. Keep your eye on the products and services popular with that age group where spending and investing will be on the upswing. That may well provide the impetus to buy stocks in those markets.
Reacting to Investment Predictions
In 2016 real-time information will be critical to day trading in order to realize profits. While many markets are expected to be relatively flat or to experience moderate gains there will always be investment opportunities for the savvy trader with an eye on trends and global activities that open financial doors. Using an online broker with the information and tools needed to react quickly when the time is right will be even more critical for the coming year.
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Disclaimer: SureTrader Blog is not intended for U.S. persons. Stock information is not to be viewed as buy or sell recommendations.