“Investment Themes for 2016” Video Transcript
[Music]
Tracie McMillion
Head of Global Asset Allocation Strategy
This year we are introducing four longer-term themes that we believe will play a pivotal role in shaping
the global markets in the coming years, and we examine the potential risks and opportunities associated
with them.
Our first theme, "Consumers, Commodities, and Currencies" describes the relationship among these
three financial-market fundamentals.
In developed economies, consumers are the engine of domestic growth and they also play a central role
in promoting global economic growth. But what if the capacity of the world's factories exceeds current
consumption?
[Image on screen of Global oil supply and demand balance chart]
Typically, pricing and currency adjustments occur until a new balance between supply and demand is
reached. The recent drop in oil prices and the rise in the U.S. dollar is an example of this. For investors
this means that returns among countries and regions may vary widely.
Our second theme, "Fuel for Growth," discusses the factors that should help support global economic
growth. We think equities continue to offer growth potential and are fairly priced. However, risks may
be looming in the bond market.
[Images on screen with words Developed Equities and Bonds]
For investors, this means an overweight allocation to developed-market equities and an underweight to
developed-market bonds may be appropriate.
Our third theme, "Disruptions and Volatility," considers how an interconnected global economy is
contributing to the on-going market volatility. Geopolitical crises, and changing fiscal and monetary
policies, have, at times, triggered episodes of market volatility.
It's important to recognize that disruptions that lead to market volatility can pose a threat but also may
present a chance for investors to buy assets at lower prices.
[Image on screen of chart with Low price, High price and low price opportunity]
Our fourth theme, "Living Longer and Living Better," discusses the opportunities and challenges of an
aging population in a low-interest-rate environment. The traditional strategy of investing for growth
during working years and then shifting to income-generating assets at retirement may not ensure that
enough assets are on hand to last through retirement.
[Image on screen of chart with title “Those age 65 today can expect to live to..Men 84.3
years old, Women 86.6 years old. Source: Social Security Administration, ssa.gov,
November 2015]
We believe it's time to rethink this traditional investment strategy and make adjustments throughout
the retirement years. To learn more about how these four themes could impact global financial markets,
and get specific strategies for managing investment risk, download our special report-- "Outlook 2016:
Navigating risk in a year of change".
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[Image on screen of report 2016 Outlook Navigating risk in a year of change]
The opinions expressed reflect the judgment of the speakers 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
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Additional information is available upon request.
All investing involves risk including the possible loss of principal. Different investments offer different levels of
potential return and market risk. Equity investments are subject to market risk which means their value may fluctuate in
response to general economic and market conditions, the prospects of individual companies, and industry sectors. Investing
in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political
and economic instability, and different accounting standards. This may result in greater share price volatility. Bonds are
subject to interest rate, price and credit risks. Prices tend to be inversely affected by changes in interest rates.
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& Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors and other Wells Fargo
affiliates. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
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