As the drag from weaker oil prices and the stronger U.S. dollar seen in 2015 begins to fade, U.S. corporate profits should turn upward in 2016. But with muted growth continuing across most of the world's advanced economies and in many emerging economies, investors should expect more subdued returns going forward.
This observation and several others were made during T. Rowe Price's annual Global Market Outlook press briefing, which was held in New York City in November.
KEY OUTLOOK OBSERVATIONS
- Growth has steadied in advanced economies, anchored by the U.S. andEurope. Peripheral European countries, including Irelandand Spain, have more economic momentum than their larger counterparts. Emerging market economies are generally slowing, driven by China and large commodity producers.
- Inflation is likely to remain benign – rising, but still low in advanced economies, and generally lower in emerging market economies. Core inflation is broadly below central banks' targets in advanced economies and is more mixed in the emerging world.
- Monetary policies among global central banks will continue to diverge, creating selected interest rate and currency opportunities across world bond markets.
- Moderately rising short-term interest rates in the U.S. should not derail stocks in 2016, though robust global growth is required for more broadly favorable equity markets. Global growth will be led by consumption and services, and by companies that are disruptive innovators.
- Stock returns in emerging markets will continue to vary by country. Latin American economies that are tied to commodities may continue to struggle. Stock valuations inAsia-ex Japan are generally compelling and corporate earnings in many markets should improve after several years of poor growth. Though China's economic challenges are well known, opportunities do exist, especially in sectors such as technology, consumption, and services, as well as in some state-owned companies that are undergoing structural reforms.
- Corporate governance is improving inJapan, leading to more shareholder-friendly policies and interesting investment opportunities.
BALTIMORE, Nov. 18, 2015 /PRNewswire/ --
Here’s what he’s promised to do as Prime Minister of Canada as it relates to household balance sheets. ( Excerpts taken from Money Sense) October 19th 2015
Cut the annual Tax Free Savings Account (TFSA) contribution limit from $10,000 back to $5,500. Arguably one of Trudeau’s least popular campaign promises (an Angus Reid survey recently found that 67% of Canadians aren’t in favour of any political party reversing the increase), the roll back could cost savers tens of thousands of dollars over the long term
Raise income taxes on the top 1% of earners, trim it for everyone else. Trudeau’s platform was anchored by his promise to cut the middle income tax bracket from 22% to 20.5% for Canadians earning between $44,700 and $89,401 a year, amounting to savings of $670 a year (or $1,340 for a two-income household). He’s also promised to create a new tax bracket of 33% for those earning $200,000 a year or more.
Reduce payroll taxes. Employment Insurance (EI) premiums are expected to fall to $1.65 per $100 under a Liberal majority government.
Give a little here, take a little there, from young families. Trudeau has vowed to cancel the up to $2,000 annual benefit to couples with kids under the age of 18, leveraging the recently introduced income splitting for families option. He also said he would ditch the Universal Child Care Benefit for Canada’s wealthiest families and instead introduce the Canada Child Benefit that will give the majority of families up to $2,500 more, tax-free, every year (typically for a family of four).
Protect the home-ownership dream. . The Liberals also said they would loosen the existing qualification rules for the Home Buyers’ Plan, allowing more Canadians affected by sudden and significant life changes (such as divorce) to access their RRSP savings for a down payment on a second home.
Reform the CRA. Among Trudeau’s plans for the Canada Revenue Agency (CRA) is a vague promise to have the agency contact people who have tax benefits but aren’t collecting them.
Restore the traditional retirement age. The Liberals have vowed to restore the Old Age Security (OAS) and Guaranteed Income Supplement (GIS) eligibility ages back to 65 after the Conservatives under Stephen Harper had introduced a plan to gradually raise the eligibility age to 67 for anyone born in or after 1958. Trudeau has promised however to leave pension income splitting intact for seniors as well as introduce a new seniors price index to ensure benefits keep up with rising living costs and a 10% boost to the GIS for single, low-income seniors.
Grants and grace periods for students and young professionals. Trudeau made headlines when he said he would eliminate the need for graduates to repay their student loans until they are earning at least $25,000 per year.
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