Robusto quarto trimestre non potrebbe riscattare il mercato dopo un anno ansioso

The stock market has endured fierce punishment last year and had hardly anything to prove for that. A strong fourth quarter has cured some of the damage, but as the year ended and 2016 started, the battering market started again.

The 500 & Standard & Poor stock index ended 2015 at 2,043.94, down just 0.7 percent per year, after a late rally helped benchmark to recover most of the lost ground during a harsh weather summer. The fourth quarter earnings of 6.5% recorded a decline of the third quarter of 6.9%.

One reason for the flat but volatile performance is that there is much to worry about, but it has not happened much.

“Markets did not go anywhere in the year because there was a lot of noise and we were waiting for the Fed,” said David Kelly, Global Pioneer Global Strategist. Morgan Asset Management.

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Wall Street and the world were waiting almost all year for the Federal Reserve to raise interest rates. Lastly, the central bank forced itself into mid-December, setting its target for its key short-term rate by a fourth percentage point and suggesting that further increases in 2016 would be reached.

As for noise, “we are worried about Greece blowing the euro up, China slows down and another government stalemate” in the United States, said Kelly. “We were worried about them, but in the end they did not become a real problem, they just kept the people out there, not that these issues went away, but we managed to look at them.”

Investors recently did more than look. They have endured another pummeling. A rise in Chinese currency, the renminbi, apparently on the fear of economic weakness, led to a sharp fall in Chinese stocks in two of the first three trading days that hit the global markets. S. & P. ​​500 lost 6 percent in the first week of exchange, the worst starts at one year.

This was a placid and profitable fourth quarter start. The national average stock fund rose 4.3 percent, according to Morningstar, driven by double-digit gains for portfolios focusing on technology and healthcare. International stock funds rose 3.3 percent, as China and Japan have outperformed.

Fourth quarter earnings alleviated the widespread weakness that had been masqueraded by the comparative force in large companies dominating S. & P. ​​500. The annual decline in the index has still allowed to overcome the shares of smaller companies and almost all The main foreign markets, especially in the developing world. Almost every other significant asset class has gone worse, including, including investment bonds and less high-yield credit, foreign currency and commodities such as gold and oil.

Throughout 2015, the national reserve fund dropped by 1.3 per cent, with small business specialists falling by 5 per cent and medium-sized businesses by 4.4 per cent. Average losses exceeded 20% for portfolios focusing on energy and other products.

International equity stocks fell by 2.9 percent, as losses in emerging markets in continental Asia and Latin America have more than offset earnings in Europe and Japan.

Throughout the turbulence before the fourth quarter and so far in 2016, markets seemed to increase Fed’s pace in pace. S. & P. ​​500 closed in December almost exactly where it was on December 15, the day before the move and the yield on 10-year treasury bonds was 2.27 percent on both days.

However, bond funds are weak towards the poor. The average dropped 0.7 percent in the fourth quarter, injured by a 2 percent drop in the high performance niche. Throughout the year, bond funds in general fell by 1.4 percent, with high yield bonds losing 4 percent.

Even though Wall Street has accepted the grace rate increase, some investment advisors would not have hoped and wonder how the markets will play this year, especially if the Fed continues to raise rates.

“They did it because they felt they had to,” said Hank Herrmann, general manager of Waddell & Reed. “I do not think the data necessarily sustained.”

GDPNow, a prediction tool for the Federal Reserve Bank in Atlanta, estimated on 6 January that the economy grew at an annual rate of 0.7% in the fourth quarter. The forecast has eroded steadily by almost 3% two months earlier.

The Fed has signaled that it will raise rates four times this year, but markets do not believe it, and neither Mr Herrmann. Based on interest rate derivatives prices, two further increases are expected. He anticipates one or none.

“Economic data will provide the answer and I think it will remain something less than robust,” he said. “I do not think we have a threat to inflation. There is still room for employment to increase and not cause a rise in wages.”

Charles de Vaulx, investment manager at international valuation consultants, is concerned about inflation. It is also concerned about the opposite problem: deflation. It may happen, he warned, as the Fed tries to withdraw from crisis mode and return to normal monetary policy while the world puts excessive debt on government, business, and consumer books.

“It’s a binary result. Deflationary trends will remain in place for another ten years or will there be inflation?” De Vaulx. “The result is unknown and investors must recognize their ignorance. They should avoid making a one-way bet,” too much to force government bonds, for example, to safeguard deflation or raw materials to protect inflation.

Whatever your way to play, it offers long-term anemic performance, or, worse, for many investments.

“Stocks and bonds will be able to deliver exceptionally low returns for the next five to seven years,” he predicted. “Investors have to plan accordingly”.

This means buying a diversified set of goods, pointing to those that look cheap. For Mr. De Vaulx which includes stocks and bonds in emerging markets; High yield debt, in particular bonds issued by oil companies; And gold and other goods. It also encourages money-collecting, which he has called “a critical tool to have in a low-return environment where volatility can be with us for a while.”

“The key is to have realistic expectations, then diversify, keep cash, be agile, be willing to be opposed,” he advised.

Matthews International Capital Management, Robert J. Horrocks, questions how realistic the Fed’s economic expectations are and what will be the consequences for Asia if growth remains smooth.

“The jury is still out on how strong core growth in the US economy is,” said Mr. Horrocks. “Inflation is still very low. The Fed has been pretty fast in reverse and suspect that it is worrying some Asian markets.”

This is because the prospects for growth in the region are not so great, and its central banks have not been much more free of monetary policy than the Fed.

“In the short term, we have some heads of head,” he said. “I’m not sure how strong the case is to” stressing Asia “at a time when the Fed is raising rates.”

Asian stocks are not cheap, Horrocks said, although he thinks the ratings are in favor of American and European markets. Looking ahead in the near future, “the underlying elements that support growth and, ultimately, increase profits are still in Asia,” he added, including increased productivity growth over other regions and faster economic growth.

It recommends high quality companies that pay healthy dividends and have a strong competitive position within their industries. Of the two major continent markets, China prefers India but finds good opportunities at lower prices in Thailand and Malaysia. It will also look for “middle class growth stories” in areas such as retail, insurance, health care, and consumer outlets.

Ben Inker, co-responsible for allocating assets to GMOs, is also daunting the short-term economic outlook, and not just in Asia. He stressed that the value and volume of global trade declined last year, something that never happened outside of a recession.

Mr. Inker encourages investors to go cheap and go abroad. Its preferred destination is emerging markets, which have suffered high indebtedness and weak prices in raw materials such as oil and industrial metals that they export. Emerging markets have made a turn for the worse – the funds focusing on them have fallen by 13.4 percent in 2015 – as the dollar grew stronger, lowering the dollar’s value of their business and increasing l ‘Debt denominated debt in proliferated dollars in the developing world.

“There’s a lot to fear, but generally the best money is to do where people are afraid to go,” he said. “People have abandoned the emergence; You can buy good companies at really cheap prices.”

Oil prices are expected to recover at some point, he added, but he admitted it could take some time.

“It’s hard to imagine a situation where the price remains at $ 30-40 a barrel if the world produces as much oil as it consumes,” he said, “production has come to a standstill.”

US Treasury Treasury Treasury Shares Better Value for Investors Sensitive to Security With Conventional Treasury Instruments, said Mr. Inker. He also believes that it is worthwhile to make a chance on long-range high performance bonds, but he warned that “they could get worse before they get better”.

Mr. J. Kelly of J.P. Morgan also favors high-yielding loans, although it expects the economic and investment conditions to improve before it gets worse now that the Fed has started to raise interest rates. The first step to increasing rates in a tightening cycle can boost the economy by putting more money into the hands of savers, he said, while fixed-rate borrowers often do not see changes for a while. Homemade sales may also improve as the prospect of higher mortgage rates requires buyers to act.

After this initial activity, growth slows down, and further interest rate hikes can stifle a recovery. That’s what Mr. Kelly says.

“You want to avoid a situation where you are raising rates as the economy is slowing down,” he said. Because the Fed has waited so long, “there is a risk of this towards the end of the year. We have the potential for a typical boom and bust induced by central banks.”

Before it happens, Mr Kelly expects stocks in economically sensitive areas, such as financial services and consumer cycles, to outperform performance. It also loves emerging markets. Dollar appreciation in view of rising interest rates has made them bad, but now that rates are going up, the dollar can go ahead.

“My instinct is whether something is cheap and good for long-term investors, do not expect a better purchase opportunity,” he said.

But many investors in 2016 focused on selling opportunities, particularly in assets that have made spectacular drops in 2015, such as Chinese oil and stock. Mr. Herrmann asks whether the Fed will be all that he wants to further tighten his credit. They support the safest investments, including Treasury stocks and stocks in areas that can generate growth in an anemic economy, such as health care, technology, and consumables. He also recommended being prepared for more excitement, like it or not.

“It’s a time of confusion,” said Mr. Herrmann. “You have to predict the unpredictable now more than ever.”

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