Biggest macro themes of 2016 – part 1

In our previous discussions, "Biggest risks threatening global economy heading into 2016", available at http://www.econotimes.com/Biggest-risks-threatening-global-economy-heading-into-2016-134754# , we listed chain reactions of lower oil price and bad debt in emerging markets as two of the biggest risks threatening global economy. However, there are several other macro themes, which could move market in 2016 and beyond.

US election 

US election may not be a major market mover for 2016, since the election is going to be held pretty late, on November 8th, Tuesday. However it is likely to keep influencing market throughout the year and next year might have greater implications. Convention timelines are - July 18-21 Republican national convention, July 25-28 Democrat national convention, August 4-7 Green national convention. Though the campaign is already underway, we have not covered it much in 2015 but will be covering it in greater detail this year.

Middle East tensions

Tensions in Middle East started mainly four/five years ago, over a relatively smaller country Syria. Western powers and Sunni Muslim countries want incumbent president Bashar Al Assad to move from power, while Russia and Shite Iran want him to stay. Syrian tensions ignited greater crisis across Middle East and world as Islamic State came into prominence, OPEC cartel became dysfunctional, Russia joined bombing in Syria, Yemen fighting, Israeli-Palestinian fight escalated and today Saudi Arabia cut off diplomatic ties with Iran after attack on Embassy. We expect this Middle East crisis unlikely to abte but escalate in 2016.

Who will follow FED 

Undoubtedly Bank of England (BOE) is likely to be the candidate but key question is when. When will BOE policymakers would feel comfortable to hike rates? - Answer to this question will be key influencer for pound based pairs, gilts and FTSE 100.