In a couple months, we will do the routine – you know, the one where prognosticators put together their ‘Top 5 Surprises for 2016′, or ’10 Market Predictions for the Upcoming Year’. They’re like the tabloids at the supermarket that nobody claims to look at, but somehow we always know who just broke up with who.
Oh, and they usually include something along the lines of ‘This will really be the year interest rates go up’.
Okay, here’s my 2016 market prediction, and this may be my only macro-type one for 2016: This upcoming year will be the year of Fiscal Stimulus.
Sometime during 2016 (or perhaps even sooner during the presidential debates), we will become so nauseated by the discussion of fiscal policy/stimulus and infrastructure spending that it will become unbearable. Similar to ‘Cash for Clunkers’ on steroids. Who’s available to work on these drummed-up projects given our economy’s full employment (comprised of an aging population, mind you) will be just minor details going forward.
Nobody disagrees with safe bridges. The fact is quickly emerging though that monetary stimulus/policy may have staved off some worst possible scenarios, but with the Federal Reserve reluctant to reverse course, the economy appears not as advertised. If 0% money rates for seven plus years is incapable of stimulating a runaway economy, then it’s inevitable that politicians are going to gravitate to fiscal policy and gorge themselves on stimulus spending.
This election cycle will only accelerate the rhetoric.
Implications of this 2016 market prediction? I would put ‘fiscal stimulus’ on your radar screen and try to gauge its ‘loudness’. If we hear a whimper about it during 2016, I would surmise that the economy, and/or the markets, would be humming along. However, if you start filling your Presidential debate bingo card with infrastructure, stimulus, and bridges in the first five minutes, you may need to ratchet back your economic outlook.
Twitter: @HeartCapital
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Any opinions expressed herein are solely those of the author and do not in any way represent the view or opinions of any other person or entity.
