We’re tactically overweight with U.S. large cap equities, so we still think they’ll do well next year with decent earnings growth, a nice dividend and continued buyback yield of shares. We project that next year, U.S. equity markets should provide upper-single-digit to maybe lower-double-digit returns. We also like what we call international developed markets – places like Europe and Japan that are earlier in the recovery cycle.

As unfortunate as the Paris attacks are, we still think that those geopolitical events are going to be with us in 2016 and beyond. We don’t think it changes our economic outlook particularly for Europe or the rest of the globe. … (Terrorism acts), as much of a human tragedy they are, don’t tend to swing the economic variables too far. But we do need to be diligent about geopolitical events to the extent they can either erode confidence or slow down economic growth.

We think that 2016 is in a lot of ways going to be a year of change. You’re going to see a change, obviously, in Federal Reserve monetary policy, meaning they will finally begin liftoff in raising interest rates, which creates a different dynamic for the economy. And certainly we have the presidential election in 2016, so a change in political leadership and what elements that will evolve from that could have market impacts.

 

I would say one of the areas where I would like to see the economy get a little stronger in 2016 would be manufacturing. So far in this recovery, the U.S. consumer has been very strong, but manufacturing has been somewhat absent or anemic. We would like to see more capital expenditures in property, plant and equipment, and that would round out the recovery.

As your readers know well, commodity prices, particularly commodity prices salient to Iowa,  peaked out in the summer of 2013, which created a very difficult Iowa economy in 2014. As a matter of fact, Iowa as an economic engine only grew about 0.4 percent in 2014, which was subpar to how the broader U.S. economy was growing. … I think (agricultural indicators) will get marginally better in 2016, (but) we’re still not bullish on commodity prices because there’s still a little bit of a supply-demand imbalance there. And a stronger U.S. dollar, because so many commodities around the globe are denominated in dollars, can actually put downward pressure on all commodity prices, not just agricultural commodities.

We don’t think so. Actually, the housing market is doing quite well. When you look at year-over-year construction spending nationally, it’s in the double digits in increases. Housing starts and permits are pretty strong year-over-year. Frankly, housing is one of the bright spots of the U.S. economy. As interest rates go higher, the Fed controls the short side of the yield curve … but the mortgage market is largely dependent on the long side of the yield curve: the 10-, 15- and 30-year rates. We don’t see much lift in those rates in 2016. That end of the curve is closely tied to growth and inflation expectations, more so than what the Fed does.