The roughly 15% of the U.S. economy that is tied to energy and manufacturing is suffering immensely. Nevertheless, the remaining 85% is sound and the recent market selloff is a buying opportunity, said Joe Seydl, capital markets economist for J.P. Morgan Private Bank (JPM). ‘We think the U.S. consumer will drive growth this year, just like in 2015,’ said Seydl. ‘The market is punishing all sectors alike. Thus, we think the recent selloff is creating attractive opportunities from a valuation standpoint.’ Seydl expects the Federal Reserve to hike its policy rate two or three times this year even though the market is currently pricing in a single hike or less. While the economic news out of Japan and Europe has been less than sanguine of late, Seydl said the recoveries are indeed progressing, and the recent ECB and Bank of Japan moves are akin to insurance policies. He said credit growth and consumer sentiment remain robust in Europe and Japan and the respective central bank moves are more about tinkering with the pace of that robustness than a change in fundamentals. The divergence of monetary policy between the Federal Reserve and its fellow central banks has already strengthened the dollar to the point where it is hurting U.S. multinationals. Seydl sees the dollar appreciating this year, but at ‘a much more moderate pace.’
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