Will Equities See Muted Gains In 2016?

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Gold Silver Reports – The year 2016 is likely to see a slow start, similar to what was witnessed in the last couple of years, due to some additional slowdown in manufacturing, said Mark Vitner, senior economist at Wells Fargo Securities.

The forward looking data on manufacturing is still pointing to additional deceleration – new orders data looks horrible, while the US economy failed to record any growth in industrial production in 2015. A lot of people try to minimize the troubles in the factory-sector arguing manufacturing is a small part of the economy, but it still accounts for the bulk of the swing in GDP from quarter-to-quarter.

While the general-consensus economic growth for 2016 is 2-2.5 percent, Wells Fargo Securities thinks weak manufacturing could be the biggest obstacle to achieving that target, he noted.

Many investors believe 2016 would be a repetition of last year where gains would be muted. With interest rates rising, profit growth is likely to be stuck. While wages are ticking up, it’s hard to raise prices amid falling commodity prices, which is going to hurt margins.

With equities ending the year lower, muted gains in 2016 could actually mean no gains to show for at all and investors could end up with less, said Mark Luschini, chief investment strategist at Janney Montgomery Scott. – Neal Bhai Reports