This year, choose equities over fixed income: report

By Staff | January 11, 2016 | Last updated on January 11, 2016
3 min read

Market volatility will continue into 2016, but investors shouldn’t be discouraged. They’ll still benefit more from equities than fixed income, and there may be some stabilization of commodities throughout the year, says an outlook report released by AGF Investments.

Read: Should you invest in banks this year?

What’s more, “China is committed to creating stimulus and supporting its economy. We look for a soft landing when it comes to [China’s] slowing GDP growth.”

Within Europe, the report says, “The impact of QE should result in improvements in the underlying European economies moving into the second half of 2016. [And], Japanese equities should continue to benefit from substantial corporate reforms and strong valuation support.”

Still, even as growth in Europe improves, “global growth prospects remain relatively anaemic.”

Read: Expect sell-offs in 2016

Turning the Canada, the report encourages investors to remain cautious, given economic improvement will depend in the strengthening of commodities. Read more.

A mixed report for the U.S.

On Tuesday, U.S. President Barack Obama will deliver his final State of the Union address. And it’s worth noting, says Associated Press, that the economy is far sturdier today than it was when Obama took office in 2009.

Yet, there’s more work to be done because the stout job market is currently accompanied by tepid economic growth and stubbornly flat wages. Also, there are worries about global temperatures and terrorism.

Economically, the big picture is that Friday’s December jobs report capped a strong year in which employers added 2.65 million positions. That made 2015 the second best year since 1999 for job gains, exceeded only in 2014.

Further, for a third straight month, the unemployment rate was 5%. That’s the lowest three-month dip in eight years, and half the 10% joblessness that was registered in October 2009.

Still, average hourly pay seems stuck, after having slid one cent last month to $25.24. That left the growth of average pay at 2.5% last year, below the 3.5% that economists consider healthy.

The latest figures show the overall economy growing at a modest 2% annual rate in last year’s July to September quarter, though analysts expect improvement.

The U.S. economy in 2015

For Wall Street, 2015 was a roller coaster. Record highs in spring were followed by an abrupt summertime swoon, prompted by worries about the strong dollar’s impact on exports. Also, markets are worried about China’s slowing economy and about sagging oil prices.

By year’s end, the Dow Jones industrial average had faded by 2.2%, its first down year since 2008. And, it began 2016 with steep declines fueled by continued China worries.

Through November, the most recent figure, inflation grew by 0.4% for the past 12 months. That minuscule rise was well below the annual 2% increase the Federal Reserve prefers.

What’s more, oil prices slumped to their lowest levels since 2004, with typical households saving $660 on gasoline costs compared with 2014.

Even though the Federal Reserve raised its key interest rate for the first time in seven years in December, homebuyers’ mortgage interest rates remained at a relatively low 3.97% in the first week of January—that’s up slightly from a year earlier but well south of the historic 6% average.

Also read:

BoC may cut rates again by mid-year: experts

Prepare for rocky markets in 2016: report

5 things to watch for in 2016 staff


The staff of have been covering news for financial advisors since 1998.