It’s tough to be overly bullish on stocks in 2016 because of the friction between an increasingly hawkish Federal Reserve and an economic slowdown in China, said Jurrien Timmer, director of global macro at Fidelity Investments. As growth slows and wage inflation rises in the U.S., the equities market is giving the green light for the Federal Reserve to raise interest rates this week. Meanwhile, on the other side of the world, the People’s Bank of China is trying to stimulate its economy by gradually devaluing its currency, which will require a careful balancing act, because it is linked to the U.S. dollar. According to Timmer, if the China/U.S. balancing act is successful, there could be some recovery in oil prices, allowing earnings growth to recover from its current energy-induced slump. Nevertheless, with the earnings cycle in the slowing phase and profit margins near historic highs, it may be a challenge to build too positive a case for equities. 'If you are an active investor and you can wade through what is working and what is not then 2016 should basically be a repeat of 2015,' said Timmer. On the positive side, valuations seem reasonable, with the forward price-to-earnings ratio at 16 times earnings for the Standard & Poor’s 500 Index.