I think the key question at the start of 2015 is can the USA economy boost global markets, or will global markets pull down the USA? Answer that correctly and you’ll probably make nice returns over the coming 12 months.
Lower energy costs and a stronger dollar will favor countries that import oil and export goods to the US.
The corollary is that US exporters and multinational companies will be negatively impacted by the strong dollar and the US energy sector will be hurt by weak oil prices. These are the companies that have recovered the best from the recession.
US equity markets have been buoyed by the Federal Reserve’s cheap monetary policy, fueling mal-investments like corporate stock buybacks. This too might end IF yields are ever allowed to reach their true market price. Time will tell, I’m skeptical that the Fed will raise interest rates this year because of weak global markets and deflation caused by lower energy costs.
The major issue is that the world is awash in debt and overcapacity. If global markets are able to stabilize, then select countries should present a value play.
Currently the market is in a CORRECTION, invest with caution.
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