Forecasts for 2016

yourwealthourinterest-1From the morbid predictions of who will die this year to the more pleasant foretelling of who will get married –– we all love the forecasting.

Every year, companies and individuals make predictions for the months ahead, and with 2016 it isn’t any different. Here are the predictions for 2016, some from the world’s biggest banks. My own comments are italicized.

1. The Goldman Sachs Group says the United States Stock Market will end almost where it started.

2. The HSBC Bank expects a weaker United States dollar against other major currencies.

This would be welcome news for Barbados if it plays out in the British pound exchange, given the current US$1.47 to one GBP. Theoretically, British tourists will have more money to spend with a stronger pound.

Also my preliminary research shows that British tourist arrivals are highly correlated with percentage changes in the pound.

3. Citibank predicts a weaker Chinese yuan as the People’s Bank of China (PBOC) depreciates its currency.


4. Barclays’ Barbara Byrne expects to see US$60 a barrel oil for political reasons, as sovereign wealth funds decline.

I disagree on the catalyst, but do agree oil will recover a bit in 2016.

5. Scotiabank sees gold averaging US$1,090 an ounce for the year. Likewise, most of the big banks see depressed gold prices for 2016.

Here are my firm’s top three macro predictions for 2016:

1. Global stock markets will struggle again this year with the catalyst being subprime debt encouraged by United States’ quantative easing. We anticipate losses.

2. Oil will bottom in 2016, my prediction for this happening between April and August, but markets may start to price it in sooner.

3. The bitcoin community and price will struggle this year, as concern about the slow adoption of the technology mounts, and as the community begins to realize the reason why the big banks may appreciate the technology but not the mechanism to access the technology –– that is, bitcoins and their associated price volatility.

In addition there is the unknown of when bitcoin’s founder, often referenced by his pseudonym as Satoshi Nakamoto, will sell his stash of bitcoins (he has the largest hoard in the world).

4. Jamaica’s currency could actually appreciate in the near term, if Jamaica’s government and private sector can continue to persuade investors in the private sector. Certainly not a trade worth pirsuing, it is unlikely bond investors have any appetite for Jamaica’s government debt; so this scenario can only play out via the private sector.

I hope you enjoyed. Let me know what your predictions are for 2016.

(Craig Harewood is the investment director at Ourinterest Inc., an investment company that trades on global markets, and from time to time assists small businesses and boutique investors.
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Disclaimer. These articles are intended to be
general in nature and provide sufficient advice to change/promote the investment culture in Barbados.
They are not meant to give specific investment advice to any individual, and the author does not accept” any liability for investment deals made or any action taken as a result of reading these articles.

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