Let’s outline areas of the globe where we see investment opportunity.
Emerging Markets
India. The monsoon has started strongly, and is forecast to be normal or better than normal after two below-par yards. A normal monsoon will improve consumption in rural areas and will allow the central bank to cut rates on August 9. Lower rates will improve the GDP growth rate and encourage reinvestment in capital projects.
Brazil. Brazil continues to make progress. New management is turning around the economic system and creating confidence among foreign investors. Brazilian stocks, currency and bonds are all rallying. We remain bullish on Brazil.
Russia. If you are bullish on oil stocks and you are bold, consider Russia. The market is not without risks, but the economy is highly connected to the price of oil. If Asian demand for oil continues, and if supply continues at current levels, oil will move higher, and so will Russian stocks and the ruble.
Europe
We see Europe as a potential area of opportunity; see our section above.
The U.S.
We remain bullish on the U.S., especially on technology, specialty retail, materials, oil, and gold stocks. We note the worldwide demand for oil is strong with U.S., China and India all increasing usage. Increased demand of this amount has not been included in most research on oil supply and demand and will act as a catalyst for oil to move higher in coming weeks. We will not be surprised to see oil at $60 per barrel in 2016.