January 5, 2016 – Universally, Wall Street’s stock market outlook assumes muted gains as they prepare investors’ expectations for another year of struggles. With the S&P 500 and NASDAQ at a 23 P/E ratio (according to the Wall Street Journal on 12/31/2015), we cannot disagree… and we don’t like swinging at bad pitches. Therefore, we continue to avoid U.S. stocks and anticipate that future volatility will bring us better values with which to reenter the markets in the future. The current weakness in oil (which is at an 11-year low), general commodities and emerging markets will produce a sizeable rebound when the world economy finally regains its footing.

Since the Federal Reserve announced their intent to raise rates up to 8 times over the next two years, interest rates will continue to be a focus of the financial markets. We doubt that the U.S. economy will avoid a recession over that time period and allow short term rates to rise that far. Read more about our anticipations in the First Quarter 2016 Economic Update.