Gazing into the crystal ball to look at what’s in store for 2015 is always dangerous, but we thought we would give it a go anyway.  The key theme for 2015 will be the contrasting situations in the US and Europe. We expect the US to see continued economic growth and rising interest rates, whilst Europe will remain largely stagnant and pursuing a program of full-scale quantitative easing.  This will affect currencies, interest rates, stock and commodities.
Oil prices will also play an important role in 2015, stabilising at well below $100 a barrel. This will help push up global growth by up to 1.0% and provide a further boost to the US, Chinese, Japanese and even Australian economies.
Investors will naturally expect US Treasury bond yields to rise in keeping with stronger US growth. However, we believe the lack of inflationary pressures in Europe and lower oil prices will change the normal response from bond markets and keep a cap on yields.
US equities look promising. In our opinion the US remains the best risk/reward trade for 2015; especially if you believe that the US Dollar will continue to strengthen.
We will also expect to see a switch from value to growth stocks, particularly favouring social media, mobile and other technology companies.
If you’re looking for high return – and can stomach the risk – then the Nikkei 225 could be a good bet. Driven by earnings growth, a weaker YEN and demand for growth companies.  Also, the re-allocation to equities by large Japanese pension funds shouldn't hurt the Japanese equity market.
The China A shares market should continue to rally in 2015, after adding more than 50% in 2014. It’s generally pretty difficult for international investors to access A shares. Be sure not to confuse it with buying Hong Kong listed China stocks, which we don’t expect to deliver the same level of returns.
In contrast to the heady returns of China and Japan, we expect the Australian equity market will deliver a more modest return.
In a market dominated by finance and resources companies, the stagnant demand for Iron Ore and the fall in Oil prices will keep the market constrained.
At 81c to the US dollar, I believe the AUD is undervalued – but who am I to predict such things - given I’ve been wrong for a year or so now.   Many commentators and banks are calling 75 cents for the AUD.
Some are also calling for interest rate cuts but again I disagree with the logic and expect rates to be on hold as the RBA waits to see the effect of the lower AUD and oil prices on inflation.