By now, it’s no news that for stocks, 2016 is the worst start to any year in the history of the U.S. stock market. All of the blame has been placed on China and crude oil, and most of the experts will tell you that the U.S. economy is actually surprisingly strong despite what prices are doing. And for a long term investor, this means buy and buy a lot. However, some exporters are warning against this strategy. Their arguments are well reasoned, and even if they are not quite popular right now, they do deserve a second look by those that will have money in any market in 2016.
However, what most people are not hearing is that there is an undercurrent of declining exports going on all over the world. The exact numbers for export declines for 2015 are not yet finalized, but they are predicted to be one of the worst in recent history, although not as bad as 2009 when exports fell by 37 percent. As you may recall, this was partially because of the global financial crisis that began in 2008, and falling exports made recovering from that recession quite difficult for most investors. Today, we have the benefit of hindsight, but the fact is that a similar scenario is beginning to occur.
Add to this the fact that many experts do believe that China’s mess will get worse before it gets better, and this has the potential for even more negative fallout for the U.S. China is one of the world’s largest importers of raw commodities, and if the economy worsens here, global exports will necessarily need to contract even more. Unfortunately, this creates a lose-lose scenario, and the U.S. economy will end up being one of the biggest recipients of the negative impact.
Yes, this is just a theory and definitely not a strong likelihood of what will happen in 2016. But it’s important to look at what counterarguments are saying about the economy, just in case there is merit to them. These sort of cases have been made in the past and have been accurate in the past, so it’s not wise to immediately discount minority theories just because they are not widely accepted right away. This goes for investors and short term traders alike, especially those that take out limited expiration date investment products, such as binary options. If a prevailing trend takes hold and it goes against what technical indicators might say, a binary trader could suddenly find themselves in a lot of trouble. Even if you don’t necessarily agree with these counter theories, you should be aware of them and pay attention to them, just in case they begin to take root as an actual occurrence.
As with any negative prediction, there are good things that can come out of this. A falling U.S. stock market means a stronger dollar. The same expert that is predicting the above scenario made headlines about a year ago when he predicted the rise of the U.S. dollar. Since then, it has gained more than 15 percent in value against major currencies. The fundamental premise is actually really easy to understand. Falling exports—such as what we’re seeing in crude oil—drive up the value of the dollar. This gives the argument more credibility, but still does not make an inevitability. If the dollar keeps getting stronger, many doors open up for Forex and binary options traders, and those willing to move some of their capital into these markets. For those that currently focus on just stocks, this is a viable option for future gains.