Top Predictions for the Next Half of the Year – Introduction
The first half of the year has just ended and the financial market have been interesting. In the United States, the major indices have continued to go up. The dollar has weakened as Trump wanted. Crude oil prices have remained in a range between $43 and $55. The Euro has strengthened significantly and the state of M&A has remained largely flat. Only a few large deals have been announced. In this article, I will come up with a few predictions for the remaining part of the year.
- Merkel will win
Later this year, Germany will have its general election. Angela Merkel, who is running for another term is facing serious competition from the former president of the European Parliament, Martin Schultz. Without a doubt, this will be a serious election that most people will watch. With concerns of Euro stability and Russian hacking, I believe Germans who have gained a lot from being the leaders in the European Union will elect Merkel for another term. She remains popular with a more than 60% job approval rate. Her strong stance about Donald Trump will also win her many people since Trump is widely unpopular in Germany.
- Instability in the United States
While the markets have risen steadily after Trump’s win, I believe there will continue to be political instability in the country. Recently, Trump has been caught in a strong battle with the media. The battle has been widely condemned by both democrats and republicans. In a recent tweet, he stated that Tweeting is modern day presidential. Trump, being the most powerful man on earth, has the ability to move the market. This, coupled with the fact that he has a majority in congress and the senate. However, with republicans not in agreement on several issues, I believe his agenda on tax reforms and healthcare will be delayed.
- Crude oil
Crude oil is currently trading at between $46 and $47 a barrel. At the beginning of the year, many investors expected the price to move much higher. This is because of the anticipated supply slowdown after OPEC leaders meeting. However, I believe crude oil price will continue to go down as supply concerns become rife. In the United States, the number of rigs has risen in the past two months. More countries like Kenya and Uganda have started producing oil. In the U.S. Trump has removed regulations that made oil production expensive. Therefore, I believe crude oil will end the year at mid-30s level.
This year has been good for traders who bought cryptocurrencies like bitcoin, ethereum, and litecoin. These currencies have gone up by more than 300%. In fact, their returns are some of the best in the industry today. In this part of the year, I believe there will be more volatility in the cryptocurrency market. There have been talk of a recession like correction in the cryptocurrencies market. There is also talk of regulating the sector. As all these talk increase, I believe the price volatility of the currencies will increase.
Commodities market are driven by demand and supply. China is a major commodity consumer in the world. This year, the Bloomberg Commodities Index has fallen from $88 to the current $82. This is attributed to the slowing growth in China and the fear of Trump’s policies. In the remaining part of the year, I expect commodities to be under pressure to perform.