Global Market Outlook 2016: A Struggle between the Bears and the Bulls

CASTLETOWN, U.K. - Feb. 8, 2016 - PRLog -- During a recent trip to Hong Kong Marcus Allen, a member of PWB’s private wealth management team was asked his opinions on what the U.S market during 2016 had to offer to his clients:

“As we started 2016, it appeared that those who were bearish or bullish on the economies globally have something to say in their support. In my opinion it is obvious that a bullish situation would see better-than-expected business news, being fundamentally led by the strength of the U.S. economy and long-held belief that the U.S. Federal Reserve will keep raising interest rates very steadily. This is what I think is the most likely scenario for 2016.

In my favorite situation, we will witness increased upside in the Japanese and European markets since these exhibit the potential for additional quantitative easing that should lift equities further. Additionally, in my opinion, as contrasting to the relatively expensive markets in the U.S., equities within Japan and Europe appear to have been fairly priced when we this year began.

In regards to fixed-income, I fully expect to benefit from upward pressure on yields as the Federal Reserve is likely to increase rates across 2016. Meanwhile credit returns I feel are likely to be held in check by concerns regarding default rates and profits. As 2016 moves forward I will be keeping a keen eye in three particular indicators; the emerging markets, S&P 500® earnings-per-share growth and U.S. non-farm payrolls.

It is very apparent that exports from emerging markets have been/are contracting, and in my opinion that is not going to change, certainly not in the short-term. They need to rise before I become less pessimistic about this market. There is the very real possibility that the continued slowdown in trade within the emerging markets could start to affect the developed markets also.

In regards to the S&P 500® earnings-per-share growth, to meet Private Wealth Builder’s expectations we will be looking for growth of between 3-5%. Finally the U.S. non-farm payrolls, we are looking for month-on-month gains that are comparable to what we have seen during the last quarter, around 150-200,000 new jobs a month. Now, if the growth in wages holds at around 2.5% then this will fit hand-in-glove with my favored position for moderate returns/growth and a muted Federal Reserve.

In line with our analysis of all the above indicators, PWB believe that 2016 will be a year of solid returns on equities globally, as the Fed rate hikes with holdback fixed-income portfolios, with credit returns being held in check by concerns regarding default rates and diminished profits. Therefore it is our shared opinion that 2016 will present some very attractive investment choices, with well managed portfolios providing enhanced opportunities to successfully navigate the markets globally through reducing exposure to volatility.

It is important for me to add that PWB does rule out a more bearish scenario during 2016, however after seriously analyzing all possible scenarios and indicators, we stand-by our expectations of solid positive returns for equities globally during 2016.”

If you have any further questions regarding this article or would simply like to establish how Private Wealth Builder can assist you, your family and/or business then simply get in touch and arrange an appointment to speak to one of our advisors.