Sunday, 8 February 2015

2014 review Part 1: Europe

 Introduction
Another year gone and another review of predictions.  2014 was, I’m afraid, a bit disappointing, partly because it was a relatively uneventful year for our G20 countries ( except Russia) and partly because I did a very bad job on the currency predictions.
Overall scores were as follows:
Political and economic  for  50 countries -75%
Currencies for 15 currencies -55% basically no better than chance
Markets for just 7 markets - 72%
 
However, while 2014 could have made me despondent, 2015 is shaping up to be much better.  I usually find the Swiss/Swiss Franc chart rather dull and the Saudi Arabian chart full of positives. But when making my early 2015 forecasts I noted that Switzerland would be associated with some drama in January 2015 and that the Saudi King might die in early 2015. With the Swiss letting their currency float free vs the Euro and the Saudi King dying in January I’m not giving up on my prediction project just yet!!!
But back to  2014. I’ve rated them as I usually do but with a lack of “events” it is harder to find a base statistic. In practice we have to assume that the base assumption is that a trend will continue. So only departures from that can be classed as above 50% accuracy.
Uk
Overall my expectations were for a positive year, with the occasional set back and this proved so with the UK continuing its positive trend for most of the time.      60%
 
Bank of England & Sterling
I did less well with sterling. I expected more currency disruption generally in 2014 than occurred and Sterling was not excluded from this. Nevertheless I did okish with my positive forecasts in the second quarter giving way to questions in June as against the dollar the trend reversed then.
In any case the stability of the currency belies the continued questions over  interest rates etc and the economic stats. With inflation under target in the latter part of the year  there was uncertainty if not actual volatility.     50%
FTSE
My FTSE projections were better with the trends more or less right for the year.  I’m particularly pleased with my Oct-November prediction for issues with major FTSE components but not the overall index. With Tesco’s problems and the falling oil price hits to some companies this proved to be an excellent call.  80%
 
Iceland
Iceland was one of my successes with my forecasts for continued economic improvements and another big volcanic eruption in the summer albeit one that didn’t have the wider effects of the last one. This was spot on with Bardarbunga in August.  85%
 
Switzerland
As mentioned Switzerland  and its currency continued to be uneventful throughout 2014. But I correctly identified that there would be shifting in the background in November /December which would lead to the upsets of early 2015.  90%
 
Euro
Rubbish.
 While I did get the timing of various trends reasonably accurately, I forecast volatility when what really happened was a one way loss of value.  My early 2015 prediction also sucks with me predicting no trend in any direction. It is only saved from complete disaster by the comment that the situation would be markedly different in January 2015.    30%
 
However, while my currency forecast for Europe was ropey, the country ones were closer to the mark.
 
Greece
I predicted a lot of improvements for Greece in 2014 and so that stats proved. This didn’t prevent the change of government in early 2015, which I didn’t predict, though I not that there could be inertia in the first few months   ( an almost certain effect of the new strange coalition.) . It doesn’t sound that impressive but when you consider the state of Greece  no so long ago the prediction of such improvements was quite radical.   75%
 
France
Most of 2014 was unexciting for France and my predictions reflected that. I did however expect shocks from October onwards. Now the timing is a bit off here, with terrorist events not occurring until December and January. Nevertheless,  I consider it a success albeit not the 100% one that exact timing might have  deserved.  75%
 
Germany
Almost as dull as Switzerland was the German prediction this time. Other than some suggestions of growing nationalism (which proved distinctly prescient) the economic outlook was continued ok for much of the year and so it proved.  Although how much of the good mood I saw in mid year was the effect of winning the World Cup is up for debate!  I didn’t forecast the latter astrologically ( indeed I am ashamed to say I forecast it non-astrologically and discounted it at the astrological level elsewhere (!) but not in this particular forecast)
80% ( for getting timing right rather than trend and with the proviso again that lack of events is harder to “prove”)
 Spain
The timing for the improvements in economic stats was pretty much spot on. Indeed the GDP and other stats for second half of 2014 in Spain defied expectations  and although price falls around December meant a more mixed picture (as I also forecast) this can be considered one of the better results of the Europe group for me.  85%
 
Italy
I predicted an up and down year economically with noticeable difficulty around August/ September. So it proved with Q3 showing another dip into recession. And as forecast, Italy’s position remained tricky at year end after an uptick in unemployment in November to the highest since records began in 1977.  85% again
 
Ireland
Finally Ireland. My forecast was for a better year in Ireland with the spotlight on the leadership. This was a reasonable predictions with the President visiting both US and China during the year, albeit not a stunning one. One can only work with what is there and if there is nothing going on, there is nothing going on! 70%
 
Turkey
I was correct early 2014 saw many of the issues from 2013 resurrected. February saw the largest influx of refugees from Syri a for a year. And while Erdogan was being seen to battle corruption he was himself challenged by a leaked tape. There was a return to protests after death of a boy in a coma and blocks on social media ( later overturned) not to mention ongoing debt issues and indeed literal debt issues. I’ve not seen anything to confirm my idea that there might be pollution matters though.
I thought that ongoing background issues would be noticeable from mid year and the ISIS/IS problem became a dominant one in the region in June and to some extent became a distraction from other issues. There were also attempts to resolve Kurdish disputes. After the January hike rates were cut again in June under a calmer economic mood.
I was right that there was no repeat of 2013 internal protests over the summer though. In August Erdogan secured presidency
I thought September and October may again be tricky financially, but that it was possible that the issues are not necessarily local ones but affect the country nevertheless. There was  a huge influx of Syrian ( mainly kurds) and big focus on IS. With an external enemy there was less internal conflict and still optimism about the future of the economy.
In the last 2 months there does seem to have been more focus on internal matters ( such as the corruption ones) as external economic ( dollar and oil)  events created pressures  but perhaps not to the extent I expected.     80%
  
Turkish Lira
After the rate rise in late January calmed the Lira there was continued volatility into March and April but there was no increase in the volatility indeed it became calmer and there were no more intrest rate changes.
Things did calm down in May but the big movement in June was negative not a reversal. It was however  more of the same in July and August with less clear direction.
There was still  volatility in September and October , but I was wrong that this would be positive – there was depreciation in September reversed in October. I was right that the trend would not be affected though,
While November was better against sterling ( not the dollar) early December saw the opposite of recovery in value for the Lira although against non-dollar currencies it recovered in late December.
30% ( again worse than chance)
 
 
 
 
 
 
 
 
 
 
 
 

2014 Review Part II: Asia

Asia
Japan
My economic forecast mainly referred back to 2013, and in reality economic trends and policy were certainly dominated by the QE started in 2013. There is little in the forecast economically that is worth highlighting. However I noted that there could be earthquakes in October and in fact Sept brought a volcano eruption and October a 6.2 earthquake. I also mentioned the possibility of minor leadership change in December though I didn’t expect a change of direction. There was no change to the head of state but there was a snap election to consolidate the policy direction.  70%
 
Yen
Back to currencies again and my 2014 worst performances. While I correctly saw that the Yen trends of the last 2 years would end in early 2014, I thought the currency would rise in July and August which it did not. On the other hand the expected fall back in Sept October did happen.  The yen’s trend did move in December but not quite as I expected.  60%
 
Nikkei
 A mixed result for the Nikkei too. I did ok in the early part of the year identifying  falls and then some lack of direction due to wider fears  and then a better position over the summer. In fact the market even rose in September as expected. But where I thought we’d see rises in Octoebr in fact there was a significant drop though the index did end the month  at its opening levels I should have foreseen more volatility. It got worse:  I thought November would be difficult  when in fact the index rose ( albeit in the first 2 weeks so possibly within the bounds on my long term forecast timing range) . Late November and December reflected my expectations rather better with overall falls removing recent gains.  65%
 
Hong Kong Dollar
As anticipated, there was no change in the actual position in 2014 but things continued behind the scenes. I expected funds flows and authority denials in the June to Sept period and in July Hong Kong’s de facto central bank stepped in for the first time since December 2012 to prevent the city’s currency from rising against the U.S. dollar due to a significant uptick in funds flowing ( possibly due to Russia events). Interestingly of all the currencies I got closest in December with the Hong Kong dollar saying it was the calm before the storm: with the Swiss decision in January eyes turned again to this other peg.  80% ( not really possible to get higher in current conditions)
 
Hang Seng
I said “The pattern for the first five months of 2014 is much the same. There is not enough momentum to carry the market much higher and there is a lot of confusing information that makes investors a little nervous. May might see some uptick though as there is a burst of enthusiasm. June and early july are also positive times with increased investment.” All of this was spot on as was the expectation of further rises in August and a more mixed situation in September and October .
But I expected the latter part of July to have falls  and although my overall forecast for November and December was more or less right it wasn’t perfect.  But overall  the best so far 90%.
 
China
As forecast things did become somewhat more difficult in March with the first corporate bond default  and auction fails, weaker statistics and property values and internal terrorism worries. Some of these having knock-on effects on other markets. Corruption issues also raised their head as expected, notably in GSK and via alleged cyber activities.
 
As expected there was less bad news by June and it continued as expected throughout the next few months with even positive news in the PMI in September. However views were mixed and things were not as good as I expected by October. Indeed this led to a rate cut in November.
 
On the other hand China’s size and position probably support the comments re the longer term path. But these are hardly concrete enough to merit positive prediction scores. One thing that does seem to have been accepted is that the leadership is stronger by the end of the year perhaps justifying my remarks about increased power.     60%
 
 
Renminbi
The first month was as expected  relatively calm.
March and April, were expected to be more interesting in terms of the float and sure enough in mid March the PBOC took steps to widen the ranges. There is a great deal of pressure building up internally and externally and the currency has to begin to change its nature. There was also an engineered 10% decline in the currency around this time.
I expected  a bit of backtracking around July though and this happened in a quite literal way with the currency rising.
I thought that the period Sept to December while  premature to expect a free float – would show a  commitment for the currency to trade relatively independently in place by the end of this year. In fact the period showed little trend or activity as the currency took a back seat to the oil and dollar prices. However while there was no commitment to making it float freely there is a stated intention to make it a global reserve currency which in the long run should lead to the same outcome.  85% on the basis that the timing on a statement on commitment of any type is a good very call.
 
Shanghai composite
I expected a change in sentiment in March with a volatility and a net rise but this did not happen.
However I expected that April  would show investors re-evaluating and that after a few months of treading water around July/August  there maybe a new trend. And the market did indeed start to turn upwards in July.
I expected  volatility in September but there was none
November however I expected the amount of trade  to increase  with the year end showing more interest  from the international community. In fact November and especially December showed a marked increase in value by almost 1/3 which might have resulted from the recently opened Stock Connect program, which gives Hong Kong investors access to Chinese A-shares.
 65% - not great on size of directions but picking up the precise November change in volumes was worth a lot of brownie points!
 
Indonesia
February was forecast to be  a stable month if rather hard for the government, and this was fairly accurate with Indonesia managing to sell some bonds and becoming less “fragile”  by March but this contrasted with the beginnings of the election battle.
However my prediction of tension in the physical environment around March was off, their major volcano eruption was earlier than this and another later around June. There was however a focus by April on election logistical problems with investor concerns over lack of direction and growth slowing
 May was forecast to be ok and in fact was without significant economic events.
The election in July had both parties claiming a win at first but ultimately Widodo was elected though challenges continued for another month and the actual government did not start till October.
I expected the underlying issues to be activated again in August, and growth was the lowest in 5 years. September saw the country under continued economic pressure particularly liquidity wise and October stats were not good.
As expected November was better  for the government with the first major policy actions ( fuel subsidies), and the impact of external issues ( in actuality cheaper oil) was deemed important in this long run.  
But December’s involvement in external issues had nothing to do with economics and everything to do with the lost Malayan plane.
50% no really concrete stuff forecast correctly.
 
Rupiah
 Broadly my forecast for the Rupiah for the first months of the year was less depreciation but continued volatility and this was so with the currency strengthening briefly around March
I thought that June would see more restrictions, in fact it saw more depreciation pre-election.
I was right that August would see  a boost in trade in the currency and probably a bit of relaxation leading to more liquidity and perhaps more inflation.
I expected the themes to continue throughout the remaining months with some impact of decisions and global events to flow into the currency in the last months ( hardly a genius forecast!). In fact the Rupiah fell back from its election high and only moved following the fuel policy changes. It is indicative of the lack of real direction that its path vs the dollar and sterling diverge at this time – essentially overall it didn’t do much….. 55% 
 
 
South Korea
I expected the positive 2013 themes to continue in the first half of 2014 and so it proved with the Won climbing to a six year high in April. But I thought that the people might feel  restricted where there was more a feeling of sadness following a ferry disaster.
As expected by June the mood starts to tone down a little with changes in government following the  disaster.
I expected  the final 3 months to see things cooling further, and there were a number of rate cuts which ultimately led to a falling Won. 
But my forecast for the end of the year was not correct.  Overall a poor  40% ( though it is often hard to get detailed English news on these countries )
 
North Korea
 
 
A country even harder to get true news on is NK.
 I though t that in the latter part of Feb  that there may be some conflict between leadership and people but that this could be cross border. In fact NK fired some missiles at this time and again in late March. 
I expected in April through June that the new mood would become more entrenched with leadership challenges continue and the country seems to lose direction and momentum with increased economic difficulties and a general state of malaise. Who knows whether this reflects the actual conditions!! I anticipated unsubstantiated rhetoric  which definitely happened (against US and SK).
As expected there was no news in  July and August
September and October I thought would see more  purpose and another phase of outward looking action. There was actually both a visit by officials to SK and some more shots.
Interestingly I forecast that the country would regains some sense of its power and it turned out that KJU returned to duty after and absence. I suspect my forecast was closer than it is possible to demonstrate.
November was as expected quieter but December saw the country accused of a cyber attack on Sony. What I described as “not knowing what was going on” was in a way true though admittedly not my exact expectation.   70% ( but possibly  a lot more)
 
 India
As expected early year talk was of the slowdown and the need for change in May. But also as expected a bit of good news on the inflation front.
I was also correct that the mood would be positive but interpreted the reason rather incorrectly, it was the desire for change that was causing the enthusiasm.
I correctly forecast the change in government, though so did many others. More notably I identified the possible landslide and although there is an alliance it was the first time since 1984 when any party had gained sufficient to govern independently.
As expected in June pre the budget all the talk was of reforms and how to resolve the economic issues and India started to show some international muscle rejecting the WTO deal.
I also correctly identified the focus on debt in September as India started a privatisation programme and the stats were positive too despite the general acknowledgment that there was a long way to go.
As anticipated it was the last quarter that showed the beginnings of policy moves ( taxes etc) though improvements by year end weren’t huge ( confirming my election comment that even the outcome of the landslide win wouldn’t change things very rapidly)    90%
 
 
 Rupee
As expected there was little overall change in the Rupee in the early months of the year. Indeed there was little trend change between January 1 and May though there was some movement in both directions. There was a short uptick in the weeks before the election.
June and July as I predicted was more difficult for the currency  though as I surmised this would not be on 2013 scale. There was no rate change in August but the currency did rise again.
September did see movement – but I failed to identify the direction which wasn’t surprising as it rose rapidly then fell in the space of a week or so (difficult to spot on a 3 month rolling prediction).
I  presumed that policy changes would support the Rupee in the last 2 months and so it proved although once again I missed the short term blip in late December.   65%
 
 
 Sensex
The index did indeed drag its feet in the first two months but as expected March was better. The rises were more consistent that I thought up to the election but there was inertia after it. The change in June to a more positive outlook and rises in JulyAugust was also right.
Again, as I thought, September did see a  more mixed picture but things were back on track by November. December was however more volatile and less positive than I predicted.  85%
 
Russia
Now we are looking at a big one. Oooooh matron! 
By the way reviewing this is a bit of relief for me; I don’t have to go scouring the FT data archives for obscure articles on this country to confirm my 2014 forecasts as I do for many others!
It is also interesting as it shows how we need to be careful with our description of positive and negative- do we mean internally ( I usually do unless I specifically state there is an international element involved) or  internationally.
Anyway  I said the first quarter of 2014 would be ok and the Olympics would be just fine. I noted there may be some problems but that it wouldn’t hurt the country in the first quarter. Obviously March brought the Crimea issue but it was too early for the real issues that month.
I both hit the nail on the head and got it wrong for the next period. I certainly got the unexpected  events, and the “too much force” but I thought the external view of the country would be good. It was most definitely not – though there was no doubt that Russia was strong.
September, however,  I got right as I said the political situation would become more challenging and the leadership will need to compromise more else create opposition. It was at this time that the activity in eastern Ukraine become more overt and there were protests ( peace marches)  in Moscow
However as suspected, despite the more difficult economic conditions, Putin’s  approval rating was mostly intact at about in December.   85% - some good timing if nothing else!
 
Rouble
As I forecast after the excitement of January 2014 February and March were  much calmer months for the currency. Indeed there was really little change till mid year. I saw background weakness over the summer more than offset by other factors and so it proved till September.
 There is a little more background imbalance in April and May. However there does not seem to be a return to January conditions in this case.
There were no interest rate changes in August though and appreciation in early September was minor.
Furthermore there were interest rate changes October and November  and the rouble direction was are more than mixed, with declines throughout and not just in the latter month.
December, did not see the phase pass at all. With huge depreciation and interest rate changes though in all fairness I only claim to be right within 6 weeks either way in these forecasts which don’t take into account short term triggers.
 60% ( for getting the first part right and the timing of the biggest decline within a few weeks.)

2014 Review - Americas and Rest of World

Americas and rest of world
Brazil
Not much to say other than as expected  not a lot was different in the first few months and April and May were indeed  relatively quiet months
 
I said June and July would be obviously dominated by a party atmosphere and there may be bad stats but no one pays to much attention. The FT said on 24th June “Love the football hate the economy”
After the event I thought that the people and government would be briefly at one but there might be a sense of disappointment or unrealistic expectations. Added to this there is a likelihood of some more poor stats In July and August. And curiously although the stats were indeed bad the voters weren’t objecting – investors were less happy.
I thought there was evidence to support the continued female leadership in October and indeed Rousseff was returned.
I thought that by the end of November we would see a new picture emerging, which is more responsible and challenging and indeed a new team was picked with notably a new finance minister which despite the difficulties faced was at least considered a positive step.   80% - A long was my biggest failure of the 2008-12 period!!
 
Real
As expected there was  more stability in the Real from February to Apil. I said  don’t rule out another rate change and sure enough there was a rise in late February and again in April.
I was wrong that the currency might rise in May and June. It remained flat. Equally I was in error that July and August would be more difficult – there was marginally more volatility but no change in the trend vs currencies in general ( though in dollar terms everything was starting to suffer)
September was indeed  a  good  month, though this did not turn out to be a long term trend.
I was right to note more interest rate changes in October ( after no change at all since the spring) but the direction continued at that point to be upwards and there were huge fluctuations in the currency’s value.
I was however right that by the end of the year things had settled down and the Real was in a more attractive position.    75% . Although my currency direction was mixed my interest rate timing calls were spot on.
 Mexico
I expected some difficulty in January , what I interpreted as protests was more in the nature of continued drug related violence. Policy decisions caused inflation hit a eight month high in January but it was better a month later and economically there were no more surprises in quarter 1 or indeed April as I said
Overall I was ok on June and July noting there was an opportunity to press forward with plans and the government did indeed make its new police force a reality. Interestingly I noted that there may be communications difficulties – this actually turned out to be the divesting of assets by Carlos Slim’s América Móvil folloiwng tougher regulations!  (This both shows the potential of this forecasting and the limitations that lack of sufficient resources and time impose on them)
I thought that there would be much less  support for the government in September and October- this turned out to be the impact of the missing kidnapped ( and murdered) students,  
I thought that the economic stats would be more positive though and there were broad based improvements for the 3rd quarter.
There were positive signs at the end of the year and in early January the president announced a series of policy actions.    65%
Mexican Peso
I correctly predicted  just minor volatility in the currency for the first four months.
I though the Peso would rise in May and it did though not as much as I might have expected.
I was wrong to expect on balance positive movements in June July though. 
I nailed August expecting bigger movements – I was unsure of direction- in fact the movements went in both directions during the month!
Although early September confirmed my expectations of rises – I didn’t see these being reversed till October when in fact they were reversed almost immediately. October and November were more mixed though.
Early November did show a peak but by the end of the month the value had gone in completely the wrong direction though with the swing that I did expect!!!  Although given the wide time orb this could reflect December’s forecast of a pull back. Nevertheless could do better. 50% - No better than chance.
Argentina
After the major emerging market currency problems in January 2014 things did indeed calm down.
My only forecast country wise  for the next two months was that it would be indicative of the next couple of years.
In line with though not exactly what I forecast there were ongoing difficulties for the leadership due to the debt holdout case in US in June.
August was characterised by the “default” as the country was unable to meet the court’s requirements so there was support for the government in a way by the people as a whole. The Argentine people respected the strong stance by their leader. And as expected there was not much change in September.
In the last quarter the bondholder situation continued to overshadow everything else. Attempts to issue new bonds locally were relatively unsuccessful.   60%
 
Argentine Peso
My January forecast was a joke. I predicted a decline in the unofficial rate but no the official one. Wrong!
I was correct that by  Feb and March things would will calm down a little.
I was completely wrong about currency markets in April and the Peso was no exception. While the peso did fall over the next quarter it wasn’t anything like the decline in January.
Everything seemed to have happened in January and that is far outside my time orb. I don’t yet have an explanation for this.
It is also difficult to assess these forecasts in the second half of the year as the greatest mover was the dollar and so many currencies have behaved in one way vs the dollar and another gainst other currencies such as Sterling.  I’ve generally used Sterling as a comparison as it was more stable but you could argue that I should use the dollar which gives different results!
I was more accurate with my forecast that things would change in July and August and also that there would be little happening in October.  But there was no particular weakness in September.
I was also wrong about declines at the end of the year (but right that there would be changes coming from government though restrictions would still remain.  50%
    
Venezuela
I thought the period January to April 2014 would be moderately ok. But protests began in  January and continued  due to food shortages.
I thought May might be easier and it was as the protests reduced though this was not quite what I was expecting.
 I said that by July  the focus would be on financial structures and sure enough there was promise of a gradual convergence of various exchange rates.
I also thought that by September the would be more difficulties and restrictions and this was so with talk of default despite oil reserves.
I further though t that  things would be more difficult by October and thus might come to a head in the last 2 months and this turned out to be the case due to the knock-on effects of the falling oil price. 75%
Bolivar
With the     official rate being of little consequence and such a disparity with the local rates it is difficult to measure my effectiveness here.
I thought there was  a risk of another devaluation in January and this happened though only in one of the government rates ( for those travelling abroad etc)
I thought that March and April might be  marginally better months, but  still with a huge impetus for a radical revamp. However it was worse than that on the unofficial market with the biggest fall in a year at the end of March.
I forecast increased pressure between May and August and devaluation in August. This wasn’t the case officially but the unofficial rate fell to a record low against the dollar at the end of the month and again in September.
But as expected  the situation hadn’t  improved for the people in the last months, I said with hyperinflation looking likely ( in fact the unofficial rate collapsed by 60% between November and December.  I thought that there would be so much pressure on the old currency that a decision on its future needs to be taken and sure enough in a press conference held on 30 December, Maduro announced that the current exchange rate system would be overhauled sometime in 2015.     80% ( difficulty to permit a higher score when there are so many rates)
 Canada
January ‘s forecast was for upsets in government  again and certainly there was talk that senate scandals would affect the leader’s re-election prospects.
As expected though things moved back to focus on the economy , with worries about house prices
I expected some shocks around May and June but although there were concerns about rising inflation and job losses there weren’t real shocks. I was correct that energy sources would be key with Canada approving  a new pipeline.
I thought that quarter 3 would be without many worries and was in fact just quiet with positive jobs news late in the quarter.
The oil market started to have an impact by quarter 4
There was a parliament attack ( domestic extremists)  in October confirming my prediction of political challenges and changes though not quite in the manner I expected . Interestingly I also suggested the focus may be on female involvement at this time and the women’s history month was devoted to the growing force of women in business.  A coincidence maybe but an interesting one.
December was as expected just a continuation with no particular departure from what had gone before. The C$ remained more or less in line with sterling throughout the year.  70% ( not eventful enough to justify much more)
 
USA
I don’t think I did very well on US and yet I didn‘t do badly either. It is just that the nature of events was rather different to my expectations but the timing was right. I have a feeling 2015 will vindicate some my statements even though they didn’t have such an impact in 2014.
As I forecast quarter 1 2014 was negative for the US with declining GDP and debt was indeed a worry with the ceiling increased again in February. There were even earthquake concerns as I suggested following some in California in March.
But I expected the president to face internal difficulties in the second quarter though and there was nothing out of the ordinary – the problems were all foreign ( Russia and IS)
I thought there would be continued instability through August and September and there was.  Late August provided another earthquake in California. There was instability of a different type caused by the protests falling the killing of Michael Brown in Ferguson. There was for a while a danger this could escalate and spread.  Economically I thought there would be equal uncertainty and plans to increase interest rates were put on hold by weak jobs data.
October was economically positive as expected , November showed quarter 3 stats confirming that Q1 was a blip in ongoing growth. And QE came to an end as promised.
Obama did meet resistance in November for the immigration plans and there was more trouble in Ferguson.
The year was also characterised by a number of cyber security breaches which perhaps account for some of the instability I could see. This issue may be about to get worse as indeed may the riot issues and maybe even the quakes.      75% ( right timing, wrong conclusions)
 
US$
My US $ forecast was all over the place for the first time since I started looking at it in 1998.
There were no dramatic movements in February and although the currency was not strong in the first 6 months it didn’t really show much weakness either.
The dollar started to strengthen in July and continued to do so with only a few minor blips for the rest of the year.
At least I was right that September was positive ! But that was  about it really. There was most definitely no depreciation in the last months of the year.!!!   20% dire
 
Dow
The market forecasts weren’t great either. It started well with weakness in late January but then it all went horribly wrong.
Basically the index rose during the whole period to July– there was neither significant volatility or weakness. There was some pull back in late July early August but nothing like I suggested.
At least I was closer in September and October with as I described a lack of conviction and even a pull back which lasted until towards the end of October.
I was right to see a change of mood in November but was completely wrong about direction; the market rose slowly but consistently throughout the month.
December was more difficult with big swings but unlike I thought we reached an all time high.  40%
 
Nasdaq
I did a bit better with the Nasdaq which although it rose in February March was indeed subdued into May.
I was one month out ( acceptable as I’ve explained many times for these types of forecasts) as the market started to rise again in June rather than July. But overall I was close enough for the period to August.
There was a shift in sentiment in September as there was some switching to more defensive stocks, though perhaps it wasn’t as great as I expected. Perhaps what I could see had more to do with the efforts against cyber attacks etc.
I did better in quarter 4 too. I expected more difficulties from the external environment leading to fluctuations rather than new lows  and this proved correct with a drop in October followed by recovery and an uncertain December   80%
 
 Rest of World
 
Australia
As expected the new leadership was not enjoying support by the first months of 2014, unemployment was a at a 10 year high and there was talk of a wave of privatizations; pretty much what I thought.
March to June saw the introduction of austerity measures and as expected resistance in the form of student protests. There was no change in the bank rate till August though. My remark about communications was also correct as May saw the announcement of a review of the spectrum policy among other things and there were plans to review media  ownership laws.
I expected June to be more positive and stats (released in early September however) showed the economy slowed less than expected in the June quarter.
July surprisingly did show signs of recovery with growth in resource exports but property appeared to remain strong ( although I suggested this might be a turning point so perhaps it wouldn’t be reflected in stats yet)
While my comment that August suggested everything was rosy was probably over egging it- certainly there were less worries at this point than at the beginning of the year.
My forecast for the next couple of months was right. No real change but worries ( reflected in the exchange rate) as the oil price changes reflected the end of commodities demand.
November did indeed start to show a change in sentiment in housing everywhere but Sydney.
As expected December didn’t really show much change in any trends, as Australians started their holiday season anyway.         80%
 
South Africa
Platinum strikes started again as expected in (late January rather than February ) and didn’t abate till late March negotiations and in some areas still dragged on after this.
I was also correct to predict no change in government at the May elections
As anticipated there was another strike in July (metalworkers) which was resolved by the end of the month but despite it all the country narrowly escaped dip into recession.
Things were basically  unchanged in the period to October  perhaps it was a little calmer than I anticipated. But things has been going on behind the scenes as November saw a different type of problem with union splits undermining power.  The falling commodity prices were also starting to affect the country.
There was a change of emphasis in December and announcements that progress was being made in fighting Aids confirmed my views that the emphasis would be on the population but I wasn’t completely accurate in my assessment of why.   85% 
 
Rand
I was wrong in my forecast that March and April would see another dramatic change in value of the Rand- fluctuations was all that happened.
There was however weakness in May and June. July was better again  as expected but with no improvement in the trend.
While early September  saw another fall the Rand then started to show one trend vs US$ and another vs other currencies.
It was fairly flat vs the dollar in the October and November, falling only to a low in December. Against Sterling it actually strengthened in November and was merely volatile in December.
The Rand has made me understand the issues I’ve had with currency forecasts in 2014. Looking at them independently is difficult unless one currency remains stable to measure them against. This didn’t really happen in 2014 with the result that only looking at pairs would have worked.  25%
 
Saudi Arabia
While it is difficult to confirm my more general long term themes it was true that there were more pressures  to broaden  women rights in the first quarter
I was correct about the more general background themes with meetings with US and an attempt to combat wider threats in the region with closer ties with Iran
The power issues ( so far as I know) in June and July were confirmed to the regional issues sending troops to the Iraq border.. The country also opened its stock exchange to external investors
October and November were dominated by oil price falls and Saudi lack of interest in cutting production rather confirming my view of the mood for that period  by still holding many cards in the oil market
December did have women to the fore with 2 arrested for driving  and held throughout the month
But of course all this pales into insignificance compared with my statement re early 2015 change of leader . Best call ever!  90%  
 
Iran
I was correct to forecast difficulties for the leadership in the first quarter with protests and complaints about the food distribution programme in February. The impact of continued high (near 40% ) inflation was indeed dominating the economic situation.
There was indeed focus on nuclear matters in April May with a pivotal point of negotiations reached mid May. And I was correct to see that there may be some progress with Iran starting to break down barriers with Saudi Turkey etc and the closer ties with the US needed to stop the ISIS threat
I was also right to note that not all this would be successful due to Iran’s hard talk approach and of course Saudi relations did not really improve at all! And the US nuclear talks were extended.
By August though there was some support for the improvements to date made by the leadership. All in all there were positive signs in September as expected- funny how the situation can change due to other elements.
By the last 3 months the inflation situation had improved a bit (20%) and the leadership was managing internal faction sin regard to the nuclear issues. But all was not perfect and  talks were again extended….
85% better than I would have expected.
 
Israel
Of course Israel  continued as Israel does in quarter 1. Attempts at peace deals went the way they usually do
.What I saw as better starred government was however the attempts at unity between the palestinian groups which most definitely did not meet with delight from Israel itself. Indeed the aggression I forecast for early August started earlier against Gaza.
At the end of August Israel made its biggest land grab in years. And continued fighting on various fronts continued.
I thought the outcome looked to be difficult for the leadership in October– suggesting they have overplayed their hand and reports were that Israel US relations had hit a new low.
The situation did calm down them in the next month  but the impact on an already slowing economy was proving problematic.
The coalition collapsed in early December and things were indeed effectively on hold as an election was called.      80%