The U.S. economy and its financial markets are being summoned to open its eyes in 2016. After years of being frozen in a dream state thanks to extraordinary monetary policy measures, the U.S. Federal Reserve has made its move to try and normalize interest rates. As a result, markets are finally being allowed to enter into a long overdue cleansing process that will ultimately bring the U.S. economy and the financial system to a stronger and more sustainable place in the end over the next few years. Stocks have already been showing signs of increased reflex over the past 18 months, and 2016 promises to bring with it even greater risks and rising volatility as this cleansing process continues forward. Whether policy makers will resist the urge to intervene and maintain the courage in the coming year to allow this adjustment process to play itself out remains to be seen.
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