UK
It is unfortunate that I usually start with the UK, as the
2015 forecast was rather dull. I didn’t have anything dramatically good or bad
happening which makes it much harder to assess. However, given that I predicted
that it was highly likely that the conservatives would remain in power (when I
made the forecast back in 2012 no less) when all the so called political
experts and polls did not, I guess I deserve some brownie points.
I didn’t specifically predict the refugee problem (I hadn’t
ever looked at Syria at that point) but I did identify ongoing unspecified
issues that correlate with that problem.
70%
Sterling
Once again an example of how difficult it is to predict
nothing much happening.
I waffled a lot in my sterling forecast, not really identifying
any trends until the end of the year. But that also reflected the reality as
not a lot happened to the value of the currency, there were no interest rate
changes, even though there were constant discussions about them. The only
movement was really in the dollar value at the year end when the US raised
interest rates. 60%
FTSE
An ok attempt. I did predict mergers being an issue around
March and the Shell/BG merger was the big topic in early April (i.e. within the
3 month window). .
I also identified that there we external factors that were
causing major shifts in value within the market but not in all companies (and
of course the oil and china situations created just such a scenario)
I was, however, wrong about the market being just flat with
fluctuations in June though as it fell 10%, although at least I was clear that
it would not rise. I also missed the rapid fall in late August. I did identify
the swings between then and November though and that it was November when the
weaker trend would become apparent. And certainly my December forecast was
accurate. 80%
USA
Unlike the UK where I didn’t predict too much hardship, I
expected the US to have a much worse 2015 than it did, and particularly
economically. The reality was very different and yet in some ways pretty much
spot on. The debt issue seemed to take a back seat, which I did not expect as
there was optimism regarding the economy. However the reality is that that debt
situation has not gone away.
Furthermore there were many issues in 2015 that show
underlying problems in the country. The protests in Baltimore and other racial
related cases as well as the events of San Bernadino in December do suggest
such problems. The changes in laws relating to single sex marriage and
marijuana as well as the highlighting of transgender issues etc. are all highly
polarising for the US. And indeed the consequences, rather than being seen (for
the most part) on the streets have been seen in the choice of electoral
candidates and although my closing remark was that despite this the US wouldn’t be embracing communism any time soon, it does
tally with the surprising strength of Bernie Saunders progress. So perhaps a better forecast than I
initially thought. 65%
US $
Ok, this one was a howler. I did not predict the continued
rise of the dollar in the early part of the year, though it was somewhat more
mixed than the previous 5 months.
I did however, predict a change in sentiment around April
and this was the case. June’s lack of trend was also identified although the
prediction for July was no better than chance. And although it turned out to be
correct that the dollar was a good bet in September as it started to strengthen
again then the forecast for weakness at
the end of the year was just plain wrong.
40% (i.e. worse than tossing a coin but not completely the opposite!).
This is a damn shame as the US$ used to result in my most consistently accurate
predictions.
Dow
It is fascinating reading my introductory comments for the
DOW in 2015. Although I predicted no particular direction for the first few
months I said some pretty dramatic things. I think they will turn out to be
prescient.
I also like my comment re radical changes in April; Apple
joined the DOW.
I think my rather bland prediction for the next few months
reflects the rather bland activity too, even identifying a July positive blip.
I then wrote – “the whole market is undergoing a
revolutionary change and values are likely to suffer as this will create
uncertainty. The Dow is likely to undergo a significant change at this point –
perhaps in composition, number of components or sector emphasis” And the shift
in August (relating to China, oil etc.) tells its own story.
I then wrote “Such changes do not bring investor confidence.
So September is therefore accompanied by a feeling of deep seated fear. But,
although there are some minor fluctuations, and certainly no significant rises
in the market at this time, there is no severe drop from then until November
either.” In actuality there were rises, but only recovery from the rapid
changes of August. It was a missed opportunity though so I can’t give myself
full marks.
I expected December
to see the return of the problems but was a bit out on timing as this did not
happen till January.
Despite some mis-steps I’m very pleased with this forecast.
Particularly given the fact that I was relatively positive about this market
from 2009-2014 compared to many astrologers.
It is important not to just see the difficulties in the global picture but
to understand how they are reflected in a specific market’s chart. In this case
government financial policy protected the markets for a long time. That is
changing. 85%
NASDAQ
Having accurately identified that some of the gas would be
pumped back into the NASDAQ over the past few years, I did not predict a good
start to the year. In fact it was ok. In the first month or so the index went
no-where. Arguably, also, the small range over most of the first six months
confirms my view that the market would be subdued with some positives. The
summer forecasts for June –July were reasonable too.
I saw a change coming in September (obviously this was late
August in reality, well within the bounds of my forecast range), which would
put an end to more speculative valuations. And sure enough the events of this
period took the heat out. Indeed the NASDAQ tracked the Dow almost exactly over
the 3-4 months suggesting that it is beginning to be judged on the same
criteria.
That said some of the major tech stocks did well and the
index held up better than the Dow due to less energy exposure.
I correctly assessed the end of the year would be more
stable. It was and that itself is noteworthy given the pattern of the NASDAQ at
other recent year ends. 80%
Basically I predicted that not a lot would happen with the
value of the Euro in most of 2015 and this proved to be the case. Despite the
forecast fluctuations it ended up where it started against Sterling
The currency was volatile in the summer as expected (due to
the resurrected Greek situation) and it did as forecast fall briefly in October
/November but this was as expected short lived.
Although the dollar strengthened at the yearend due to the
interest rate change the Euro did not fall against other currencies. 80% (can’t really give more as not enough
happened)
Germany
Looking at my forecast for 2015 in Germany one thing stands
out. I forecast difficulties for the leadership particularly in the early part
of the year (this was mainly due to Greece again) and the latter part (which
turned out to be the migrant refugee crisis). I am really pleased with this
prediction given the strength of Merkel’s reputation up till this year.
I noted debt issues might be to the fore around July, when
the Greek vote did in fact cause ripples.
I also noted that there were shades of the early 1930s in
the themes for Germany in 2015, something that the migrants issue does reflect
to some extent.
But I also predicted that economically there would be
relative stability and strength (I imagine I was confused when I wrote it how
that could be!!) and sure enough Germany has survived the year well
As this extract from Bloomberg Jan 14thdescribed.
Germany, the euro area’s biggest economy, is benefiting like no
other member of the 19-nation currency bloc from unprecedented stimulus by the
European Central Bank. With unemployment at a record low, wages rising and oil
more than 37 percent cheaper than last year, domestic spending has become the
driver of economic growth and exporters are shifting their attention from
slowing emerging markets to recovering developed nations.
So a rather successful forecast for Germany -90%
France
My French forecast can be considered less of a success
though.
Generally, it was ok, economically the year was relatively
benign, for a country that rarely shows dramatic growth- though unemployment
remains a problem.
Not predicting the February attack on Charlie Hebdo may be
forgiven, although highly publicised it was very specific. But failing to
identify the November attacks is a failure. Though I did see the significator
of the events I described it as merely due to the power of the government
rather than unpicking the reason behind everyone supporting France at the time.
The events probably also had an impact on the political agenda and the regional
elections of December but it is still poor not to have picked up something more
than I did.
It is an example of how difficult it is to pinpoint the
nature of how a specific event will play out years in advance even when you
know “something” will occur.
Still, given the overall forecast and the ability to
identify something the score for the country is not too bad: the pretty
standard 75%
Spain
My overall forecast for Spain in 2015 was for an
increasingly improved and stable economic situation. And this proved to be the
case. In the words of “focus Economics” on 2/2/2016
Spain’s economy
grew at the fastest pace since 2007 last year, as the country remains firmly
entrenched on a growth path following years of recession. Strong domestic
dynamics, underpinned by the lowest unemployment rate in over four years in Q4
and a less tight fiscal position, have allowed the economy to outperform many
of its European peers.
But my forecast also included some challenges with a
repeated theme of challenges re partner nations especially around May and
October/ November. In fact it seems that my interpretation was at fault, the
issues identified were not about foreign partners but domestic opposition with
the populist anti-austerity movement
Podemos making dramatic gains in local and regional elections in May and the
run up to the elections which finally occurred in December resulting in no overall
government at the year .
85% - all timing right but not full marks due to the
misdiagnosis of the one significator.
Italy
My forecast for 2015 was devoted almost entirely to the
economy. Something which given the events of the last decades is in itself
noteworthy. And it was correct – in Italian terms at least there was a year of
relative positive political stability!!!
I expected that May would show the beginnings of some
positive economic news and indeed it was in May when the country was finally
able to point to a quarter of, albeit tiny, positive growth and again as
forecast July showed positive news, this time in decreasing unemployment.
However, I was also sceptical suggesting that the news was
mixed and emphasising that the problems in Italy were far deeper than just
recovery from a 2000s boom and bust. And indeed the signs that the overburdened
and depressed banking sector needed help have continued (and start to be
addressed in January 2016). 90% ( A bonus for no mentions of leader!)
Ireland
I did not forecast a good year for Ireland’s economy, seeing
that it would still be struggling to recover from 2007/8. Indeed I predicted
that the end of the year would be really quite difficult.
In reality the only difficulties in December related to the
floods.
In fact it experienced high growth during the year ( albeit
from a low position); over 6% and making it the fastest growing Euro economy in
the year with improvement in the construction sector ( though not general
consumption) and a reduced deficit; the only concerns being spending pressures
given the still high debt levels. However, politically it was interesting with 3 new parties
formed.
Nevertheless, noticeably worse than random on this one: 30%
I didn’t have too much happening in my forecast for Greece
the first half of the year- although given some of what had gone before, we
must note that everything is relative!
In fact, in the first few months, while on the surface the
duck was looking calm, underneath the feet were paddling furiously to stay
afloat.
I gave a rather mixed bag forecast for the period April to
October with some stability but also the expectation of drama /surprises and
radical change affecting the government.
For instance I thought that the period around July would be
ok and there was a surprise miniscule amount of growth reported for the second
quarter.
But also in July, with the country up against the wall re
repayments, and the banks closed for 3 weeks, there was an internal vote in
favour of measures to keep the creditors happy despite this being against the
general policy of the ruling party.
In August, after a German vote, Greece secured its third
bailout. So the country was able to make its due payments. I suppose that is
stability of a sort!
I was closer on the government situation with the Prime
Minister resigning at the end of August.
And in September the ruling party survived following elections (I
estimated this sort of event in October but that’s within the month either side
range).
I suppose it was
rather a strange period and exactly as I described. Lots of drama but
ultimately no changes.
I expected the last few months to be mixed. And they were;
with protests and strikes but ultimately approved its budget and received some
aid.
A difficult one to score. On initial reading I felt I’d done
badly but breaking it down I feel that actually the prediction summed up the
year well- a lot of events but not much difference in trend. 80%
Iceland
Nice to follow Greece with Iceland; the contrast is so
telling.
I started by noting the ongoing sense of restriction (represented
by the capital controls still in place)
I also noted some more specific matters might be highlighted
at the beginning of the year, including climate change and indeed there was a
Time report that land was rising 1.4inches pa in some areas of the country. A
theme that as expected was repeated at the end of the year as the Paris Climate
Agreement brought climate issues back into the discussion in Iceland, after
silence regarding the issue before last parliamentary elections
However, I had the period March to May as a possible time
for volcanic or other disruptions. In fact the 2014-15 eruption was deemed to
have come to an end at this time
Nevertheless, there was a disruptive influence of sorts at
play as a new Gallup
poll published 30th of April showed that the Pirate Party formed in
2012 was now the biggest political party in Iceland with 30.1%.A picture that
has continued all year and re-iterated in December.
I expected talks would return to previous matters by June
and Iceland started to prepare to phase
out its currency controls- (by the year end had relaxed controls on one the bank)
and raised rates.
I thought that there would then be a positive period and so
it proved with even talks that the economy might be overheating.
Overall a moderately successful attempt but nothing special
and a significant miscall 65%
Switzerland
I don’t enjoy creating or reviewing the Swiss forecasts
because it’s a country where so little usually happens, it is all a bit tedious
and there is a temptation to magnify small potential events into larger ones.
I though the picture in 2015 would be more mixed than
previously especially from March. I expected this to be reflected in property,
banking and pharma.
In fact it was March when Switzerland conceded to sharing
banking information with the EU heralded by many as the end of the “Swiss
banking model” . There were concerns over property too. With simultaneous fears
that it was stoking a bubble investment wise while becoming unaffordable
rent-wise. And in April it was reported that Switzerland had attracted
the fewest companies in a decade after voters passed measures that aim to limit
immigration and started revising corporate tax breaks
A bit of minor shakeup was expected in May but a calmer June
to August. September was also predicted
to indicate bigger changes (in Swiss terms that is!). In fact it was October’s
election increase in support for the far right that was notable (again within
our bounds of acceptability for this level of forecast)
The end of the year though quieter was expected to be
tempered by long term concerns.
And regarding the longer economic view: Sergio Rossi to
Swissinfo on 6/1/2016 said
The consequences were
much more noticeable in the second half of the year. Many companies took
decisions that reflected their fears. There was increased pressure on wages, in
some cases salaries were partly paid in euros rather than francs, jobs were
lost, and certain business activities were moved abroad. The Swiss economy
stuttered and consumption declined. Saving money became more important for
people, and they went shopping over the border.
Actually, a good result, though as usual one can’t give high
scores without dramatic events: 80%
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