2016 Outlook - Year Ends With A Whimper And Not A Bang

The U.S. dollar and oil share the end of year spotlight but for two very different reasons.

Crude oil, although up modestly today – 50 cents or so per barrel – is down more than $20 per barrel on the year. Oil is in a pricing crisis but it is not in a production or consumption crisis, an interesting turn of events.

The greenback, on the other hand, is up 9.00% for the year, an up-move that has been good for American consumers yet bad for U.S. equities, or so many investors think.

Low crude prices and a strong dollar should be making the U.S economy hum and thrum, yet skeptics seem to rule the roost, believing that more money in consumer pockets, lower import prices, cheaper producer prices for everything from plastics to asphalt create a negative atmosphere for the economy.

As if to underscore this backward thinking, all three major U.S. indices were off between 0.65% and 0.75% to close the year out.

Trade was choppy; volume was high. On December 31, everyone seems a bit more than a little exhausted from the volatile second half of the year that was crowned with an interest rate raise enacted by the Fed on December 15. Can we think of a worse seasonal moment to push the rate up? (Even if it was a minor hike…)

On the last day of 2015, gold reinforced its role as the peripatetic precious metal, wandering about, stopping at one price point, moving to another, then back to the original price.

This was especially true from the beginning of March until today, wherein gold did not move beyond an approximately $160 trading range. ($1210-ish to 1050)

Platinum and palladium showed more trading excitement and are worth keeping an eye on in ’16.

A new year awaits us. Take a deep breath and begin again. Celebrate wisely. Relax fully, and as always. 

Wishing you good trading,