PARSIPPANY, N.J., Nov. 23, 2015 /PRNewswire/ -- Hennion & Walsh, a provider of investment services and an advocate for individual investors, today released their Market Outlook (link here) for the fourth quarter of 2015 as well as their initial outlook for the first quarter of 2016. The recent research report reveals that while the U.S. economy is poised for a strong finish to the year, looking into 2016, the U.S. is projected to experience lower annualized GDP growth. As a result, investor appetite for allocations to the Euro Area and Japan, in addition to a few emerging market economies, remain an attractive asset class for risk-adjusted return potential over the intermediate longer term.
This past third quarter taught investors that they wouldn't be able to escape global contagion fears related to ongoing activity in China and a presumed interest rate hike in the U.S. Despite the ups and downs, economic and sector performance remained strong which suggests to the investment community that the markets are poised for a strong finish to 2015.
"Overall, we believe that the recent volatility that the markets displayed are not all that uncommon and may, in fact, be constructive for future market growth potential. As such, during these times of heightened volatility, investors must take time to re-visit their asset allocation strategies to ensure that they have adequate levels of diversification across all asset classes," said Kevin Mahn, Chief Investment Officer at Hennion & Walsh Asset Management.
As Hennion & Walsh prepares their outlook for 2016, the research team has identified five factors that they believe will be critical to future market growth potential. These include: housing, employment, U.S. and international economic growth, inflation and interest rates.
- Housing: Historically, trends in housing data have been a significant component of the U.S. economic recovery to date and will likely be one of the engines of future growth for the U.S. economy. While existing home sales continue to struggle in the lower price ranges, housing statistics overall continue to paint a positive outlook for the housing market over the short-intermediate term as the U.S. economy continues to stabilize.
- Employment: Investors should pay particular attention to report cards on the overall health of the U.S. jobs market. While the employment picture looks brighter in the U.S., continued new job creations, as well as improvements in wage growth and labor force participation, are critical for the next phase of the economic recovery.
- U.S. and International Economic Growth: Despite concerns over the pace of U.S. economic growth, there are no present risks within the global economic system that would cause the U.S. to fall back into a recession. It is anticipated that mature economies will experience essentially no expansion in the rate of GDP growth by the end of 2015 and emerging markets are expected to see the rate of growth in GDP contract by approximately 40%.
- Inflation: The fall in overall cost of goods and services has driven the annual inflation rate to zero, reaching a level last seen in 2008. However, once energy prices begin to rise again, the Consumer Price Index (CPI) should return to the same trending levels last seen heading into 2014.
- Interest Rates: Investors experienced heightened uncertainty following the Federal Reserve's unanimous decision to not raise interest rates at this point in time. Following careful review the revised projections illustrate the Fed may be more concerned with future global economic growth.
"Given the strong likelihood that the Fed will raise interest rates in the near future, investors should look to asset classes or sectors that have performed well on a relative basis during previous, gradual periods of tightening," added Mahn. "More specifically, we recommend that investors maintain an overweight position to the U.S., but continue to diversify across capitalizations, consider satellite allocations to REITs, Energy, Biotech and the U.S. Dollar, in addition to taking advantage of fixed income securities for downside protection and income potential, and look for attractive entry points for allocation to international equities."
A full copy of Hennion & Walsh's latest Market Outlook can be downloaded here.
About Hennion & Walsh
Hennion & Walsh, a full service brokerage firm specializing in municipal bonds, was founded in 1990 by Richard Hennion and Bill Walsh. Their mission is to be the individual investor's fiercest and most passionate advocate. Investment guides, webinars, seminars and online content are just some of the ways they help investors become better informed and make better investment decisions. The firm has built its reputation on developing strong, mutually beneficial relationships designed to last a lifetime, serving over 18,000 clients with brokerage accounts and managed portfolios. They are committed to providing individual investors with the institutional-quality service and guidance they believe they are entitled to. Additional information on Hennion & Walsh is available at www.hennionandwalsh.com. Hennion & Walsh is a member of FINRA and SIPC.
SOURCE Hennion & Walsh