Grace Century has released their adjusted market forecasts and insights for the remainder of 2016. Having once again demonstrated a strong track record of market forecasts with fairly accurate calls on a number of the sectors for the early part of 2016, the UAE-based firm has softened its negative view on metals and interest rates, but it still predicting a strong US Equity Market, trading ranges for currencies and for oil.
Ras Al Khaimah, United Arab Emirates, May 12, 2016 (Newswire.com) - Grace Century, an International Research and Private Equity Company based north of Dubai in the United Arab Emirates, has published its revised semi-predications, as they relate to Global assets, financial environments, and markets, for the rest of 2016. Grace Century has repeated its accurate calls on oil and a number of the currency exchange rates. The target of higher interest rates continues to be stifled by the Global softness of markets, with the view that the Federal Reserve Board has “boxed itself into a corner” with its dual mandate of steady monetary environment, full employment, and moderating long term interest rates.
The full report is available in detail to their members, but Grace Century’s CEO Scott Wolf commented, "I think the Fed has overplayed its hand. All the 'tools in the toolbox' have been used and my view is that nothing or no-one is big enough or smart enough to be able to be control any market."
"I think the Fed has overplayed its hand. All the "tools in the toolbox" have been used and my view is that nothing or no-one is big enough or smart enough to be able to be control any market."
As in Grace Century’s previous forecasts, the Unites States is forecast to remain the strongest World market. With near full employment numbers and favorable commodity and interest rate differentials, capital should continue to flow into U.S. sectors. It should be noted that monthly employment numbers (non-farm payrolls) will begin to stay under 250,000 as a reflection of this full employment.
Currency / Exchange Rates
At the beginning of the year, Grace Century called for accumulation of commodity currencies like the South African Rand and Canadian Dollar. These have appreciated around 10-15% from their December / January lows. Participants are urged to only add to these on pull backs, but remain favorable to both. There could be an opportunity to accumulate if the U.K. does leave the EU, or if there is an interest rate raise agreed during the June Fed meeting. Scott Wolf comments “on an exit, a sharp pull back to $1.26-$1.35 (Sterling) is possible. We believe this would only be temporary, and this if given the opportunity would add to existing positions. If they do leave the EU and the currency does not drop against the U.S. Dollar, I would be buying with both hands in that scenario”. Grace Century sees continued trading ranges in the Euro, with again any break below $1.09 to be bought.
Stock Market Indices
Grace Century correctly called the short-term top of the U.S. market, the forecasted break to 1800, basis the S&P 500. Grace Century stated that they were confident that this was not a bear market but a correction back down to @1800 . Grace Century has told its members that this should be bought on the way down to 1800 level. It already traded there twice only to rally to its present 2100 level, representing a +17% move. Grace Century has candidly indicated that it does not see a lot of other areas of interest, but has become more selective, looking at more definitive plays like technology firms in the cloud space, while healthcare remains the firm’s favorite market sector.
As before, interest rates are predicted to continue to support Real Estate prices. Grace Century’s recommended areas from the beginning of the year stay intact: Countries that have been affected by the sharp exchange rate moves, like South Africa, Europe, and Eastern Europe, with the firm believing that incredible opportunities and values exist for buyers with capital in USD.
U.S. Interest Rates
Regarding rates, Grace Century acknowledges that the Fed will move at its own pace. Scott Wolf’s comments reflected Grace Century’s previously held position on rates: “Normality is inevitable. I believe, based on my 32 year tenure in this industry, that situations eventually go back the other way. It might take 2 more years or even longer, but we will see 30-year rates at 8% one day again”.
Gold & Oil
Grace Century has maintained a neutral to bearish stance on precious metals for the last two years. Whilst never advocating outright selling, it has suggested liquidating precious metals if held from lower prices. The metals have ignored all bearish factors but have not acted on bullish factors, except the recent drop in the US Dollar and rally in oil. Grace Century recognizes that there has been an unwillingness of participants to exit. With that, the firm has stood aside with a outright call and will stay neutral on Gold and Silver, forecasting that when the market does move - up or down - the move should be dramatic.
As it relates to oil, Grace Century’s previous forecasts were “spot on” and predicted the downward trend, with a possible target as low as $20, where it suggested “looking to the other side”. Recognizing most of the “pain” had already occurred, Grace Century predicted a move back, to possibly $50 barrel, which it saw, only to see it drop back again into its range. The firm is of the view that this lower range of oil, between $20 and $50, will be here for some time, eventually shaking out weaker producers. It will continue to be and has been a benefit to consumers.
Concluding, Scott Wolf stresses "these are our opinions and we recognize that some are contrary to the market’s opinion.”
About Grace Century, FZ LLC
Grace Century FZ LLC is an International research and private equity consultancy located in Ras Al Khaimah, (north of Dubai) in the United Arab Emirates (UAE). Grace Century specializes in “game-changing” life science and health related private equity projects.
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Source: Grace Century