Review of 2016 Outlook
1) America is the likely to remain the destination for capital. This should push markets higher, well past fair valuations as this is capital fleeing the battlefield.
1) Correct. Foreigners continue to purchase US Assets.
2) Europe is recovering, but will flare up. I believe by the second half of the year the periphery will begin to outperform the core nations.
2) Incorrect. The major markets outperformed the periphery, which were all negative.
3) Asian markets are maturing. China’s inclusion to the SDR and the MSCI, in combination with the devaluation of the Renminbi will drive money into Chinese equities. The rest of the region will likely remain lackluster, other than some smaller markets.
3) This was correct until the 4th Quarter. Korea and Taiwan both outperformed China, as did Indonesia and Pakistan.
4) Inflation may be the surprise of 2015. I think we are at an inflection point. Wages are rising in the US, while Europe is stabilizing. Core inflation is at the FEDs 2%, and any increase in the price of oil will pull headline inflation higher. War is heating up and war and inflation are connected.
5) Oil has been testing 2008 and 2004 lows. I believe oil drifts higher, but the largest price effect will be the renewal of the terror premium.
5) Correct, but the terror premium has not returned – yet.
6) Gold should bottom below $1000 sometime in mid-2016 and finish somewhere north of $1200. A new gold bull is on the horizon.
6) Incorrect, probably early.
7) Copper will make a new low in early 2016. This cycle is bottoming. The green revolution will need a lot of copper to wire all those solar installations.