An inauspicious start

It's been an inauspicious start to the new year chez Macro Man, as both your author and his firstborn  have been struck down by a nasty bronchial infection over the past week or so.  It's left both of them feeling pretty washed out, so readers will excuse the brevity of this post and those forthcoming until Macro Man regains his former vim and vigor.

New year's resolutions to get fit are something of a cliche; ironically, Macro Man resolved to fit more rest and recovery days into his cycling regimen this year, so that at least has been a stunning success so far.  In any event, many readers may feel as if they have already spent much of the past year on a treadmill; if so, Macro Man cannot blame them.  The total return of US equity and bond markets were both within a stone's throw of zero despite all the hand wringing, dip-buying, and doom-calling that were features of various corners of the financial market in 2015.

Although Macro Man's bond data only goes back to 1999, this was far and away the closest to nowt that investors have received from stocks and bonds combined in the 16 year history of the dataset.

The question then becomes whether there is any sort of relationship between the previous year's returns and the start to the new year.   On the one hand, one might expect the major macro drivers of asset returns to be serially correlated, thus driving a positive relationship.   On the other, one might argue that pension funds rebalance when things get too far out of whack, which was an argument used to explain the early-2014 reversal of 2013's prominent trends.

In fact, there is little evidence of any strong relationship between the previous year's returns and the start to the new year.

So there you have it.   We went nowhere last year, but in any case the data is close to useless for projecting where we'll start this year.   Viva el macro!

In any case, predictions are easy and a dime a dozen this time of the year.   When he recovers strength, Macro Man hopes to revive an old tradition and make some non-predictions of his own.  In the meantime, enjoy the hand-wringing over the latest Middle Eastern diplomatic dust-up, and may you stay free from bronchitis in 2016.

Good luck.