Biggest macro themes of 2016 – part 3

This is the final part to our macro themes series. In previous two, "Biggest macro themes of 2016 - part 1", available at http://www.econotimes.com/Biggest-macro-themes-of-2016-%E2%80%93-part-1-137535# and "Biggest macro themes of 2016 - part 2", available at  http://www.econotimes.com/Biggest-macro-themes-of-2016-%E2%80%93-part-2-137559#7 , we have listed US election, Middle East tensions, BOE hike, UK's EU referendum, FED hikes and Brazil as our top macro-economic themes for 2016, rest are as follows:

Monetary policy divergence 

2016 could mark as end of incremental monetary policy divergence. If both Bank of Japan (BOJ) and European Central Bank (ECB) sit tight throughout the year, there would be no increase in pace of divergence from their side and it would be up to FED to pull it from here. We expect all the banks to be data dependent.

Inflation 

Inflation is likely to be one of the biggest influencer of 2016. Hot or cold, you won't just be able to ignore it. Very sign of it would influence monetary policy throughout the year.

China 

Hardly matters in which business you are, ignoring world's second largest economy would be next to impossible. First trading day rightly suggest the same, as China's stock market hit circuit and trading halted after market dropped 7%. Be it slowdown, hard or soft landing, Yuan devaluation China in 2016 likely to be in the news.

European migrant crisis 

In 2015, more than million arrived in Europe to escape death and turmoil in Middle East, Africa, and Afghanistan in search of better future. That has already dented relations among European Union members. While German Chancellor Angela Merkel has been chosen as Person of the year by Time magazine and Financial Times, she faces rebellion in her coalition. Similar sized arrival in 2016 could seriously fracture EU and might even lead to the downfall of Chancellor Merkel.