The roles consumers, commodities, and currencies play in the world economy and how they can help shape the markets.
Let's look at the effect consumers, commodities and currency have on the US economy.
Generally speaking, in a growing economy consumer confidence is typically higher and people spend more money.
When prices decline for commodities, for example, when oil prices are low, making prices at the gas pump lower, consumers can generally buy what they need for less and have more cash left for other spending, like travel or luxury items.
The value of currency - in our case, the U.S. dollar - helps determine the amount of goods and services consumers can purchase.
When the dollar appreciates, the prices of U.S. imports often become cheaper.
Today, commodity prices have stabilized, the dollar is stronger versus other currencies, and consumer confidence appears to be upbeat.
All signs that the recovery should persist well into 2017.
For more details on how these drivers are influencing your investments, and what to expect from them in the coming year, download our special report "Consumers, Commodities, and Currencies".
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. The prices of various commodities may fluctuate based on numerous factors including changes in supply and demand relationships, weather and acts of nature, agricultural conditions, international trade conditions, fiscal monetary and exchange control programs, domestic and foreign political and economic events and policies, and changes in interest rates or sectors affecting a particular industry or commodity. Products that invest in commodities may employ more complex strategies which may expose investors to additional risks, including futures roll yield risk.
Investments in currencies involve certain risks, including credit risk, interest rate fluctuations, fluctuations in currency exchange rates, derivative investment risk and the effect of political and economic conditions. The use of currency transactions to seek to achieve gains in the portfolio could result in significant losses to the portfolio which exceeds the amount invested in the currency instruments. In addition, exchange rate risk between the U.S. dollar and foreign currencies may cause the value of the fund's investments to decline.
The opinions expressed reflect the judgment of the speaker as of the recording date and are subject to change without notice. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
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