The US equities bull market that begun in March 2009 is seven years old and valuations are no longer cheap at 17.4 times earnings. While I see no recession or bear market in 2016 the stock market faces myriad political and financial headwinds in the next three months. Donald Trump could well win the GOP's nomination for President a disaster scenario for global trade and US relations with China Mexico and the Islamic world let alone the policy making process in Washington DC. The ECB and the Bank of Japan have embraced negative interest rates anathema to bank stock investors and thus global indices. The Chinese credit bubble necessitates a yuan devaluation a disaster for emerging markets even as growth rates fall to 25-year lows. If the FOMC responds to the stellar February payrolls data with tough talk next week King Dollar increases the negative earnings momentum for a corporate America without any real pricing power or revenue growth. Valuation multiples contract not expand amid such a global zeitgeist.

The pendulum of greed and fear has swung to fear as the two 10 per cent corrections in the S&P 500 index since last June attest. The catalyst for the Obama bull market was of course President Bush's TARP banking/auto bailouts and the Bernanke Fed's epic unorthodox monetary easing. Yet the ECB monetary bazooka misfired last week and the Yellen Fed began to "normalise" or raise rates last December. The stock market has traded in a 16.4-18.5 times earnings valuation range since last summer. A "fair value" multiple of 15 could well mean 1700 on the broad index this summer. April showers in Dubai as on Wall Street do not necessarily translate into May flowers!

After manic selling in the first six weeks of 2016 the US stock market has risen strongly since February 2011 thanks to a 40 per cent spike in crude oil and the US dollar softness against emerging markets/commodity currencies. This is the reason my strategy call to buy the loonie at 1.46 was so profitable as it fell to 1.32 and the Russian rouble rose from 78 to 70 against the greenback making it the best performing currency of 2016. Yet the rally in the US stock market has also marked a shift in style leadership from momentum to value. If 2014-15 was the time to party with biotechs and FANG value investing is the new game in town now that credit risk spreads and higher volatility force investors to slash leverage in carry/momentum trades.

It is significant that Brent crude traded from $27 in late January to $40 as I write as financial markets reprice the output freeze deal in Doha between Saudi Arabia and Russia even as US shale output falls 400000 barrels a day to 9.2 MBD. Of course the world oil market is still oversupplied by at least 1.5 MBD since Chinese/global demand growth is so mediocre while Iran and Iraq continue to ramp up output. Yet $400 billion in global capex and growth momentum in the US economy triggered the short covering rally in the oil market after the Doha deal between Saudi Arabia and Russia. There have been fabulous money making opportunities in the US oil and gas producers drillers and refiners. Marathon Oil Hess Valero Energy and Pioneer National Resources were up a fabulous 30-35 per cent in the past month. Even megacaps Exxon and Chevron are up 10-12 per cent wile Occidental Petroleum is up 20 per cent is a month when biotechs were skinned alive. The hoofbeats of the herds amid brutal sector rotations on Wall Street must never be ignored.

I see no shortage of money making ideas even if the indices sag or range trade in 2016. Chevron's mega projects worldwide (Angola LNG Gordon LNG in Australia Mafumeira de Sul etc.) can add at least another 200000 oil equivalent barrels to its 2.4 million barrels a day output. Unlike Conoco Philips Chevron slashed capex to protect its five per cent dividend while its multiple is a 18 per cent discount to Big Oil. In financials traders speculate Wells Fargo could make a takeover bid for a broken American Express. Investment banks trade at derated valuations. Goldman Sachs at 148 is valued at a mere 0.8 times tangible book value. Old Tech has some ballast as Cisco's uptick to 27 suggests. Even Apple is the ultimate value stock (ex cash) near its recent lows at 93.