2016 was a year traders will never forget. We went through an Asian crisis, Brexit, Donald Trump and an Italian referendum. Yet at the end of it all, the S&P 500 managed to close the year 10% higher.
We started off 2017 on a much better note compared to 2016. It’s true that 2017 has its challenges already lined up; elections in France, Germany and Holland and the uncertainty of the UK negotiations with the EU. But can you mention a year which didn’t have its fair share of challenges? Even 2015 that started off as a great year ended up facing headwinds after Greece threatened to leave the European Union.
Looking at the bright side of things, 2017 also has its fair share of potential positive events. The US will kick off the Trump as its new President. A campaign that focused on ‘Making America Great Again’ through fiscal expansion, deregulation, higher interest rates, lower taxes and mending bridges with Russia. All this has led analysts to increase US growth forecasts and take recession in the US off the cards for 2017. Whereas before Trump we were seeing companies’ margins having peaked limiting further upside in equity markets.
Europe should also benefit from the positive events happening in the US. If inflation kicks in and interest rates start rising, it won’t be long before interest rates start rising in Europe, helping banks improve their margins and the Germans are all in for rising rates in Europe.
As we wait for higher rates in Europe, we are seeing an improvement in economic data and a rise in commodity prices which should support equity markets.
Bottom line, I think 2017 will be a good year for equity markets.
Below are my top picks for 2017. For more information on these stocks contact your adviser at Calamatta Cuschieri.
Starbucks Corporation (ticker: SBUX)
Starbucks Corporation retails, roasts, and provides its own brand of specialty coffee. The Company operates retail locations worldwide and sells whole bean coffees through its sales group, direct response business, supermarkets, and on the World Wide Web. Starbucks also produces and sells bottled coffee drinks and a line of ice creams.
Foot Locker, Inc. (ticker: FL)
Foot Locker, Inc. retails footwear. The Company offers athletics footware, apparel, and equipment for men, women, and kids. Foot Locker serves customers worldwide.
The Goodyear Tire & Rubber Company (ticker: GT)
The Goodyear Tire & Rubber Company develops, manufactures, distributes, and sells tires for most applications. The Company also manufactures and markets several lines of rubber and rubber-related chemicals and provides automotive repair services. Goodyear also retreads truck, aircraft, and heavy equipment tires. The Company provides its products and services worldwide.
Alphabet Inc. (ticker: GOOGL)
Alphabet Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.
Bank of America Corp (ticker: BAC)
Bank of America Corporation accepts deposits and offers banking, investing, asset management, and other financial and risk-management products and services. The Company has a mortgage lending subsidiary, and an investment banking and securities brokerage subsidiary.
This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.