Though the markets hate uncertainty, one thing that is clear – the environment in 2016 will be one of rising interest rates. But not all market professionals are concerned.
“I think this isn't a conventional rate hike cycle. Instead, I think the Federal Reserve is going to be very slow to raise interest rates,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Luschini thinks “the challenge that would normally come from consecutively increases in interest rates that would bring the bond curve yield up higher…is not going to be something we're likely to forsee for a long long time.”
As the United States embarks on raising rates, the rest of the world is easing. And the investment strategist is seeing opportunity in both Europe and Japan for 2016.
Earnings in both regions "will make them attractive from a standpoint of possible capital appreciation,” said Luschini. He added those markets will be “a more rewarding experience for investors than what they’ll likely find in the U.S. equity market for 2016.”
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As for emerging markets, Luschini isn’t as optimistic. He’s expecting “continued decelerating growth across the emerging market complex, principally China.”
Janney Montgomery Scott is advising their clients to avoid “the cyclical sectors like basic materials (XLB) and industrials (XLI), those sectors really need to hinge off of an updraft in global economic activity which we think is likely not to occur.”
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