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The Top 8 Risks Of The Financial Markets In 2016 

January 15, 2016

Mike Patton, Forbes

Professional investors have dubbed 2015 as “The year nothing worked.” Investments in stocks, bonds, etc., were disappointing as the markets provided little help building wealth. In this article, we will reveal the top eight risks facing global financial markets in 2016.

Note: They are not listed by priority.

1. Strong dollar

From mid-2001 through mid-2008, the U.S. dollar trended lower relative to most major currencies. A weak dollar is a tailwind for U.S. exports as it makes American-made products less expensive to foreign consumers. Around the middle of 2014, a few months before the Fed ceased its monetary expansion, the dollar began to strengthen. As the dollar gained strength, large U.S. companies that derive a significant portion of revenue overseas saw profits decline. From the third quarter 2014 through the first quarter 2015, U.S. corporate earnings fell 20%. What causes the dollar to gain strength? Let’s look at this now.

2. The Federal Reserve, Interest Rates, and the Dollar

If the U.S. floods the world with dollars, it could produce an oversupply thereby causing its value to fall. Interest rates are another factor that affects a currency’s value. Read more

 
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