Intraday Market Thoughts

2016 Stats, Notes and Themes

by Adam Button
Jan 2, 2017 18:14

The Brexit vote was the predominant market mover in 2016 but it was a year of surprises, twists and turns. As we get ready for a new year, here is a look at the numbers that mattered in 2016 and looking ahead to 2017. Three major currencies outperformed the US dollar in 2016: The New Zealand dollar, Canadian dollar and Japanese yen. The new Premium members video has 5 trading ideas. One of our existing AUD trade is +210 pips in the green.

Gaining 2.96% in 2016, the Canadian dollar was the top performer of the year, narrowly beating out the yen. The loonie didn't get much attention in 2016 but after a dismal start to the year, it rode higher on the rebound in commodities. Still, it was the first CAD gains against USD since 2012 when it began moving away from parity. Broadening the FX universe, BRL, RUB and ZAR were the big winners.

The pound was easily the worst performer, falling 16.26% against the US dollar in its worst year since 2008. It was distantly followed by the euro at -3.18%.

The S&P 500 gained 9.54% -- all of it coming in the final weeks of the year after the election results. Donald Trump's inauguration day is Jan 20 and the rip in markets raises the stakes for his administration. In the bigger picture, the S&P 500 has been in an 8-year bull market, which is one of the longest on record. The cumulative gain since the 2009 bottom is now 235%.

Adjusted for currency moves, the S&P 500 was only the third best performing index. It was bested by Canada's TSX (+21.34%) and Brazil's bovespa (+68.92%).

The performance of metals didn't get the attention they deserved but that's largely because the gains all came in the first half of the year. Since July, gold and silver both lagged but still managed to put up respective 8% and 15%  gains in 2016. Given the strength of the dollar, that's an extra-impressive feat.

Three other stories to watch in 2017

The big turn in bonds. A +30 year bull market in bonds is suddenly in jeopardy but it declines won't really hit unless inflation does.

Chinese yuan. Donald Trump is headed for a showdown with Beijing. The yuan fell 6.5% in 2016 and whether it's attacking FX policy or trade, the US and China are headed towards a bumpy patch.

OPEC. WTI finished the year up 46% and close to the best levels of the year. OPEC is the big reason for the rally and starting Jan 1 the quotas are in place. How long until the cracks appear?  

Act Exp Prev GMT
AIG Performance of Manufacturing
54.2 Jan 02 22:30

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