Investment Outlook for 2H:2016
Recent weeks have brought much uncertainty to the markets, and it is our view that the volatility will likely continue into the second half of the year. In this report, we look at macro economic factors that could influence the investment decisions and where we see the opportunity for our clients.
It is no secret that overseas markets have been terrible this year and we believe these markets will continue to underperform in the second half. Negative interest rates have yet to payoff in Japan, Switzerland and other countries. China currency devaluation has not helped its economy, India fired its Reserve Bank Chief, Venezuela is in shambles and European Union remains in limbo following Brexit and Middle East is rife with conflict.
Bottom Line: Stay away from international markets.
This bring us to the US markets. With the uncertainty over the upcoming Presidential election coupled with some warning signs from the economy has us in a cautionary mood. Even as the markets are reaching new highs, bond yields are hitting new lows, hiring is slowing even though the economy is adding jobs, auto sales is slipping, corporate profits are under pressure. As we enter the first of many second quarter earnings calls from large and small corporations, we need to keep an eye on company profits. It is our view that many of the banking stocks and the larger S&P 500 companies could post declining earnings when they report Q2:16 results in the next couple of weeks.
Where to invest in the second half of 2016?
With the Fed very likely to delay an interest rate hike in July given the turmoil triggered by the Brexit vote few weeks ago, bond yields will remain soft. As such, we recommend high quality dividend paying stocks as safe bet. We continue to recommend defensive sectors such as utilities and telecommunications as a safe haven going into 2H:16.
CEO, Future Wealth LLC
Phone: (408) 839-4430
Future Wealth , LLC is a registered investment adviser offering advisory services in the State of California and in other jurisdictions where exempted.
The information contained in the report does not constitute an offer, or a solicitation of an offer, to buy or sell any securities or other financial instruments, including the securities of companies listed in the report. Investors should not rely solely on the information in the report in making an investment decision.