Isis penetrating through the Middle East. Russia invading Ukraine. Oil prices sinking to the lowest levels since 2009. Europe showing signs of recession. In spite of these surprises, the US stock market rose to new all-time highs last year. It is said that the market climbs the wall of worry. Well the world has given the market quite a wall to climb.
As we switch gears and look into the new year there are new concerns as well as positive news. We continue to monitor the Greece situation and Europe in general. It might take some time, but with the lower Euro and Draghi looking to start a QE program in Europe there could be some upside surprises. We feel the US dollar will continue to strengthen as the US Economy continues to expand and growth continues to accelerate. The recent 5% 3rd quarter GDP number was the strongest quarter the last decade. With that in mind, we do not see a US recession this coming year and with no recession in the near future we don’t see a bear market for the coming year. As the stock market reaches new heights it does increase the chance for corrections. It would not surprise us to see a few corrections during the course of the year.
In looking at the bond market, we could finally see the first interest rate increase since June of 2006. This is not necessarily a negative for the stock market. In fact, the stock market generally continues to move up even after the first rise in interest rates.
Speaking of surprises, the decision to normalize relations with Cuba came after 50 years. On a personal note, this is exciting for me as my Father’s family resided there for many years before coming to America. I will look forward in years to come to go to Cuba and visit where my family had lived. To begin the year we all have many things to be grateful for. I am grateful for a terrific family, a fantastic team to work with every day, savvy and trusting partners and the most wonderful clients.
Health and Happiness for the New Year!