2016 equities: watch the E's and R's
FOR equities, 2016 looks like it will be defined by the three "E's" and the three "R's" - energy prices, earnings and the economy on one side; and, on the other, rates, recovery and the referendum on Brexit. The big question going forward is which of these will exert the greatest influence?
All are inter-related - for example, whether or not low energy prices can help economies recover via enhanced consumer spending is still open to debate, while a reflated and recovering economy can lead to improved earnings.
Furthermore, there are other "E's" to consider - elections in the US, with the possibility that another "R" comes into the reckoning, namely a Republican presidential victory for maverick candidate Donald Trump. If this occurs, it would be fair to say markets would struggle to properly evaluate the implications and consequences, given Mr Trump's controversial stand on many social, political and economic issues.
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