2016 FORECAST

January to June: .25% rate hike in fed funds rate. Takeaways: Not enough to interest fixed income investors. Stocks to remain strong while bonds will decline on bump and expectations of future rate hikes. Stocks will benefit from stronger dollar vrs other currencies due to massive inflow of foreign currency finding its way into U.S. market. July to Dec: oil to recover to $50 due to the destruction of Iraqi production by war on ISIS and Saudi curtailment. However, U.S. shale production will cap oil price for the foreseeable future. Takeaways: continue to invest in the consumer of oil such as airlines, trucking companies, delivery companies, plastic mfgs, refiners and agricultural companies. Look at low cost producers of oil with safe dividends to be added at a later date as advantage swings from fuel users to producers but stay with highest quality names like Exxon, Chevron, and Schlumberger. Select retailers will benefit from full employment and lower gas prices resulting in more disposable income: restaurants, department stores, cruise lines, hotel chains. Look for 10% growth in earnings and a PEG ratio of 1. Defensive positions as a hedge: Look to pharma, biotech, and low valuations. Buy on dips. Defense contractors will benefit because war is inevitable either directly or indirectly where U.S. supplies its proxies with weapons. Financials will benefit from a rate increase with improving net interest margins and housing recovery. Housing will recover slowly but rate of increases will determine the housing market. At 50 basis points a year, it will take 3 years to affect the housing market. Finally the baby boomers are dying-off. Invest in Service Corp Int. as millions opt to be cremated instead of conventional funerals.