Last year was a confusing year for investors. So, new year, new story? Unfortunately not. We’re expecting more of the same throughout the rest of 2015.
Everything seems to be going in the right direction: the unemployment rate and the deficit are shrinking and home prices are rising. But these positive economic indicators don’t always translate into easy investment advice for us.
Here are three of the things that will keep us on our feet:
1. Oil prices
Declining oil prices have a dramatic and positive impact on the global economy. After hovering between the $80 and $110 a barrel marks through the early part of the decade, industry experts predict the price will settle in around $60 to $80 a barrel. It’s great for us at the gas pumps, and for many businesses that benefit from lower oil prices, but think about the bigger picture if you’re looking at investing in the emerging markets. Lower energy prices generally help economies that import energy (the Asian countries) and hurt those that rely on energy exports (including Russia).
2. The booming dollar
When the U.S. dollar is strong, our goods and services are more expensive in the global marketplace. This can be good for Americans if they plan to travel to Europe, but a strong dollar hurts the earnings of American companies that rely on exporting and sales to foreign customers.
3. A bond stampede
With weak economies in Europe and Japan, the Fed may wait longer than normal to begin raising rates. We’re seeing a stampede of central banks to ultra-low interest rates and investors who are joining the buying frenzy, eager for the perceived financial “safety” therein. How investors will react when the rates are adjusted is anyone’s guess. These are uncharted waters.
But overall, our outlook on the rest of the year is positive. A strengthening labor market, low inflation and the growth in global consumers are only a few of the reasons for hope of a bullish year ahead if we can return to normal capital markets.
To speak to us about what 2015 will bring to you, contact Wescott Financial Advisory Group at one of our five offices across the country.