These are slow days in the U.S. stock markets. As we approach the Thanksgiving holiday, many people and most large traders have already headed home for the holiday.
The GDP growth rate for 3rd quarter was released Tuesday. Apparently, the U.S. grew by 3.9 percent not 3.5 percent as disclosed earlier. The market yawned, turned over and took a nap!
My mind wanders to what will be the state of affairs in 2015? What will grow and what will grow at a brisk pace?
While the U.S. will battle with ups and downs and hover around the 2-2.5 percent mark, we will see flat to marginal growth in Europe plus a disaster in Japan. The one bright spot in the shadows and gloom will be Asia.
Not all of Asia will be equal in the growth story. Japan will certainly be the biggest disaster story of 2015. China will continue to grow but the behemoth has now been slowed. After 7.6 percent growth this year, we will likely see 7 percent next year and then 6.7 percent in 2016.
We will be able to see strong pockets of growth in countries like India and Thailand. Both these countries will benefit significantly due to the low commodity prices. Both are heavy importers of oil and with oil expected to stay low for most of 2015, we will not only see a spurt of growth, but will also see a lower than expected inflation rate which will further boost production, investment and consumer growth.
Overall, we will see some real good results from both countries.
We will also see solid growth emerging from Philippines, Indonesia as well as South Korea. While Korea benefits from low inflation, we will see higher than normal inflation in Indonesia due to the elimination of subsidies which will be good for the country in the long run.
We should also see good growth out of Mexico and Peru in the LATAM region as well as Turkey in the Middle East region. Mexico will benefit from the little growth that US will show and Peru will benefit from low commodity prices poising it for a great year.
Turkey will benefit from low Oil prices just like Thailand and India and will chalk up some great gains during the year.
On the negative side, we will see less than 1 percent growth in countries like Brazil and Russia. Russia will suffer from dis-inflation due to falling trade, geo-political unrest as well as falling oil prices.
Brazil is a real humdinger. You would think that after being criticized by the people, yet re-elected, Dilma Rousseff would lean her lesson and bring in economic reforms immediately.
Yet she has not yet appointed her key finance minister nearly a month after her election win.
The sticky and 2nd round inflation will continue to eat away at the core growth regions and we will see sub-par growth in Brazil along with higher than expected inflation.
Overall, there will be pockets of investment opportunities for the wise. Selective investing in the right sector stocks within the right countries will being rich dividends for the diversified investor.
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