Markets 2016

Markets 2016

A time of reform, growth and challenge – key influences on global markets | December 2015

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BNY Mellon Investment Management’s Markets 2016 special report provides views from specialists across our independent boutiques on what investors might expect from the world’s markets in the coming year.

Q&A: What Do You Get When You Ask Four Questions to Six Managers? Plenty of Ideas.

BNY Mellon Investment Management believes that great minds don’t always think alike, especially when it comes to the challenging business of looking into the future. Here, we ask specialists from several of our investment affiliates what investors may expect from financial markets in 2016. READ THE ARTICLE

Benefits of the Campaign Trail

By John Bailer, The Boston Company

A year of political uncertainty lies ahead for the U.S. which will create winners and losers among industries and companies. Here, John Bailer of The Boston Company looks at a few of the industries likely to be affected and discusses the challenge of investing in today’s political and economic environment. READ THE ARTICLE

Weathering Adversity

By Urban Larson, Standish and Robert Simpson, Insight

Russia defied expectations in 2015 with its response to the twin challenges of western sanctions and plunging oil prices. Here Standish’s Urban Larson and Insight’s Robert Simpson look at what’s in store for the country in the year ahead. READ THE ARTICLE

A Multi-Speed World

By Vassilis Dagioglu, Mellon Capital

Markets experienced a series of record highs followed by major sell offs across asset classes in 2015, so investors can be forgiven for thinking that uncertainty is the new normal as 2016 approaches. Here, Mellon Capital’s Vassilis Dagioglu considers whether they may be correct and looks at some of the possible sources of volatility in the new year. READ THE ARTICLE

Retreating Expectations

By Iain Stewart, Newton

As global growth retreats, the world’s central banks face a dilemma. Should they continue with quantitative easing or look at new ways of inflating their way out of debt? Newton’s Iain Stewart believes the issues facing the global economy are largely structural rather than cyclical and not subject to quick change regardless of central bank policy. READ THE ARTICLE

The Cycle Turns

By Alex Veroude, Insight

Rising volatility, increased leverage and escalating defaults all suggest a challenging environment for fixed income in 2016. But does data point to a credit cycle tipping point? On the surface, the current environment for credit seems robust, but Alex Veroude of Insight sees signs of strain appearing. READ THE ARTICLE

Brazil: South America’s Fallen Star

By Colm McDonagh, Insight; Javier Murcio, Standish; and Rogerio Poppe, ARX

Brazil will host the 2016 Olympics, and the problems it struggles with in preparing for the games find echoes in questions about the stability of its political landscape. Here, managers from Insight, ARX and Standish discuss the outlook for Latin America’s biggest economy. READ THE ARTICLE

Japan’s Productivity Paradox

By Simon Cox, BNY Mellon IM Asia Pacific

Once seen as the crucible of hi-tech approaches to improving productivity, Japan is now better known for its aging society and persistently anemic growth and inflation. Under prime minister Shinzo Abe’s latest reforms, however, that could be set to change says BNY Mellon Investment Management strategist Simon Cox. READ THE ARTICLE

The Last “Safe Haven?”

By David Hooker, Insight

Reversion to mean is a powerful force in markets. For many asset classes that are currently “priced to perfection” mean reversion would represent material losses in 2016 says Insight’s David Hooker. For inflation it could mean significant gains. READ THE ARTICLE

Unorthodox Measures

By Douglas Reed, Newton

While many developed Western economies resorted to full-blown monetary stimulus in the wake of the financial crisis, Asian countries were more restrained in their policy response. Here, Douglas Reed, emerging markets strategist at Newton, asks whether 2016 could herald a change in Asian central banks’ policies. READ THE ARTICLE

Europe’s Never-Ending Story

By Rowena Macfarlane, Standish and Mark Bogar, The Boston Company

In the most recent installment of the global financial crisis, forces of change have buffeted the defenses of the European Union, threatening to damage it forever. What does the 2016 chapter of the story have in store? Here’s what Rowena McFarlane of Standish and Mark Bogar of The Boston Company expect. READ THE ARTICLE

Liquidity Constraints

Paul Brain, Newton; Colm McDonagh, Insight; Urban Larson, Standish; Raman Srivastava, Standish; and James Gereghty, Jr, Siguler Guff Company

With volatility expected to continue and further far-reaching financial regulations about to take effect in the US and Europe, liquidity will likely remain a critical concern for investors in 2016. In this article, five experts from across our investment affiliates explain the implications of reduced liquidity for a variety of asset classes. READ THE ARTICLE

The Big Issue

By Raman Srivastava, Standish and Khuram Sharih, Newton

The coming year promises to be a challenging one for fixed income, complicated by the search for yield in a low rate environment, a slowdown in China and questions about the future of interest rates. In this article, Standish’s Raman Srivastava and Newton’s Khuram Sharih consider how increased issuance in 2016 will impact bond market volatility and appeal. READ THE ARTICLE

Divergences in growth and monetary policy around the world are expected to lead to a more volatile market mix in the coming year.

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