Buttonwood: Frozen or Buzz?

IF INVESTORS thought they could take things easy in the run-up to Christmas, enjoying the traditional “Santa rally”, they are instead facing the Grinch. Old fears have returned to remind them of the many risks 2015 may bring.The first risk, ironically, is the consequence of good news. America added 321,000 jobs in November, suggesting that its economy is growing strongly. That, along with a monthly rise in average hourly earnings of 0.4%, raised expectations that the Federal Reserve might start to push up short-term interest rates in 2015. Central banks have been helping to propel stockmarkets for so long that it is not clear whether prices are justified by fundamentals or are simply the consequence of easy monetary policy.The fall in the oil price is also good news. By transferring spending power from producers to consumers, it may boost global GDP growth in 2015. But while consumers may gain, the effect on some oil-producing countries such as Nigeria, Russia and Venezuela will be extremely adverse. Such a sharp fall in the oil price puts huge pressure on government revenues and raises the prospect of financial turmoil next year. There has also…

Link to article: www.economist.com/news/finance-and-economics/21636095-political-risk-returns-haunt-christmas-season-frozen-or-buzz?fsrc=rss%7Cfec

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