Tag Archives: Forecasts

After the surprises in 2016, what can we expect for 2017?

Evolution of the main markets in 2016

Did you have fun this year? Well, it was not very bad, because there was some rollercoaster in the stock exchanges: Brexit, the unexpected victory of Donald Trump for the US presidency, the recent rate hike by the Fed, the Italian referendum or the ECB announcement about the cut of the money fuel have been some of the “funny” events for the markets.

We are now at the end of the year with the sight on 2017. What can we expect? Certainly, there are some people who do not believe in financial predictions, because they are usually wrong, as Barry Ritholtz jokes in this post. Others make also fun about it with the outrageous predictions, as Saxo Bank has positioned in the last years.

Others keep on doing some forecast about probable, but not sure, evolutions of the markets. For instance, Black Rock perceives three main trends:

  • Accelerating reflation in US
  • Low returns in investments that will force investors to more risky assets, as equities or alternatives.
  • Dispersion, with a widen gap between winners and losers in the stock markets.

The main risks for Black Rock are related to politics: the Brexit negotiation, the Trump agenda in US or the next elections in France and Germany are some critical points.

The forecasts by Goldman Sachs coincide partially with Black Rock, because the main ideas are: higher growth but higher risks and slightly higher returns.

The list could be longer, but there are some common points: investors perceive that politics will play a big role next year and will influence the market evolution and people will have to move to more risky assets. Monetary policy and currency evolution will also main themes, as they will condition trade and bonds.

Yes, predictions are usually wrong, but we cannot avoid reading them, because, somehow, experts are anticipating probable trends. Investor: Be ready for risky times.

Market outlook 2016: what to expect for the next year

December is time to analyse the results of our investments and look what may happen in the next year. What are the expectations, forecasts and outlooks for 2016?

Macroeconomics

Last IMF projections about the GDP assumed that global economy would grow more than in 2015. India, ex – Soviet Republics (except Russia), Mexico and the developed countries will head this positive evolution. China will grow, but at a lower pace. The worst results are for Brazil and Russia, where there will be a negative growth.

Central banks

Next week Fed meeting will decide about the possible rate hike after 10 years and some think that the US central bank have reasons to do it, as growth and employment are strong in the first economy. However, a rate hike could have negative effects for the dollar, as it would strengthen against the euro (possibly till the parity) and exports would be more expensive. What is given for sure is that the ECB and the BoJ will remain their dovish position due to the weakness of the recovery in their areas.

Stock markets

News are not specially good for US stocks, as several experts agree in a low growth or even return decrease in the S&P in 2016. On the other side, European stocks would outperform American ones, although analysts warn about the effects of a weak economic growth in 2016.

Bonds and commodities

Oil will still remain weak or even cheaper, if we take into account some forecasts. OPEC countries do not cut their production and US inventories are at the highest level. The downward trend is also sure for the rest of commodities, as Chinese lower growth will condition this markets, because the Asian giant will demand less.

What the bonds refer, there will be not much changes, as central banks will still maintain its current policy, apart from the possible Fed exception, whose possible rate hike will not have an enormous effect in the yields.

That’s the general market consensus. Of course, life is always open and there can be surprises that can move more positive or negative: the next US president election, the evolution of Daesh and the Syrian war or any outrageous predictions that Saxo Bank typically publish at the end of the year… hopefully, none of them happen.