Introduction
4 weeks ago, I thought
it was time for an update; this time for the period December 2017 to
March 2018. Now I thought that would be a very straightforward exercise as it
was never a time when really dramatic events were forecast for our chosen
selection of countries and markets.
And, indeed, the first thing that can be said is that,
overall, the forecast pretty much nailed the relative calm of the period. Something that is often overlooked in the
quest for success in predicting major global events is the ability to predict
not a lot happening…..like most of the time in Switzerland!
However, due to the fact the period was not so quiet
astrologically for me personally, I didn’t manage to finish my review by the
beginning of April. And the last week has been rather more dramatic due to the
Syria scenario. So now I’ve had to revisit a few countries to see whether I
need to update my review for those events.
Having said that, everything happened in a short period of
time and these forecasts, especially the country ones ( markets being more
sensitive in the short term) are designed for longer trends and unless large
numbers of the population are affected the events will not show up . If we were to look at day to day forecasts it
would be a different matter.- but we don’t do that because I have a life! So I
have to be cautious when assessing what I could have been expected to forecast
and what was too short term for that.
In any case there were other places where a moderate amount
of things did happen so let’ s look at the detail and see how we did..
UK
Certainly my summary of the conditions from December to
March ( when the focus on the details of Brexit just won’t go away) was accurate.
Although the economic conditions ( retail bankruptcies) seem
at first sight to be recessionary rather than inflationary – it is the inflationary
pressures of exchange rates that are the issue here. And interestingly 2 facts support the suggestion; the above
inflation pay rises being offered to NHS workers and the prospect of interest
rises
Of course some things have made headline news such as the
“Russian poisoning” saga but these will barely show up the nation’s chart as so
far they have directly affected very few people.
p.s. I would have expected some impact from the impact of
the Syria events on the government to
show up. However there is so much ongoing pressure that it is hard to extract
this short term event. Even looking at the UK chart for the past weekend
doesn’t reveal anything other than ongoing pressure on the leadership.
Sterling
The currency definitely continues to encounter fluctuations
due to the Brexit uncertainties but there are factors affecting other countries
such as the US that impact too. Still
the currency has overall weakened in the period as expected.
It is too early to judge whether the expected focus on
Sterling trade throughout all of 2018 will materialise
FTSE
I was wrong about the FTSE though, the direction in early January
was correct but from then of the index has languished.
Euro
Of course my best forecast for Germany was that there would
be lack of policy direction post election and once again the forecast for Jan
to March was not specific enough to measure – we need to look at the year as a
whole.
France
The forecast correctly identified the positive mood
regarding economic progress. But I urged caution and there are certainly areas
of dissent that need watching evidenced by farmer and other protests.
I anticipated changes in Italy in the last 2 months of 2017
and the parliament was dissolved in December. I saw somewhat better conditions
in January and February and the opportunity to transform in March. In fact the
economy is better ( but only compared to itself but not other countries) and
this has led to a change in the balance of power in the March elections. I had
March as “curious” a good explanation of the strange voting outcome.
Spain
I am quite pleased that although I forecast the independence
pressures in the late summer I had correctly anticipated things being quieter
and more positive by year end.
I saw positive sentiment for the first three months of 2018
and indeed the economic indicators have improved. I thought that even protests
would have a positive vibe as indeed the recent women’s day ones have done.
Greece
I expected a gradual recognition of continuing problems in
Greece.
In fact the economy there has grown for the 4th
successive quarter and its debt has been upgraded. However analysts tend to
agree with me that the debt overhang is still too great and the August date
looms. I still expect this to cause a noticeable shake in global financial
matters.
Ireland continued to do well as expected. My concerns about
the uncertainties over future direction turned out to be issues regarding the
Irish border due to UK Brexit.
This dichotomy continued in the early part of 2018, though
the view seems to accord with mine that Ireland’s economy is now maturing.
As expected Switzerland continues to be fine.; A US survey
ranked it 1st globally once more.
As usual there is little to be said.
Overall as forecast the economy continues to go well. But
environmental concerns are once more under the spotlight – with both climate
change and bitcoin energy drain in the news. As I’ve said before I see Iceland
as the coalmine canary when it comes to the environment.
USA
I predicted a somewhat quieter time for the US in Jan and
Feb, and to some extent that was true. The talk of new tariffs and interest
rate rises also confirmed the financial stability forecast.
But I thought that March April would bring a return to
Sept/Oct 2017 and with more changes in the top team etc this seems to be the
way things are going.
p.s. When I wrote the above a few weeks ago I was surprised
that the sabre rattling than occurred in the August –October period had not
recurred. But, lo and behold, I needed to only wait a couple of weeks for
events to confirm this expectation.
Us$
I thought that Feb/March might see inflation or some
pressure on the dollar. While this is not obviously apparent, the increases in
interest rates are indicative of an underlying issue- who will buy the
wonderful debt. We continue to see the
scenario gradually develop.
Dow
I called the Dow well for the quarter. While it is too early
to confirm the bull has died we’ve definitely reached a top of some sort.
Nasdaq
Mexico
The Mexico situation continues to be ( or at least continues
to be reported as) less unsettled than I expected. Though the US did issue a
warning re travel to one area. The release of an arrested cartel leader also
bodes badly going forward.
The issue of negotiation of NAFTA remains key for the coming
months and perhaps a drag on the economy. And there were reports that relations
were frosty after a call between the leaders.
While things are not as bad as I predicted I still feel
there is more to come. And Trump has increased military presence on the border
in lieu of wall building.
Peso
While in early January the Peso showed some weakness it did
not last as long as I expected. My prediction for March being better is closer-
we wait to see whether the next few months confirm this.
Venezuela
I expected January
and February, to be a time when the
efforts to improve the trading and budgetary position are tried but little was
achieved leading to increased conflict. This as the Bolivar prediction demonstrates
was the case.
There are increasing problems with Venezuela’s migrants
disrupting and being victims in
neighbouring countries such as Colombia
Since there is a leadership contest in May we await the final outcome, though things are going much
as I anticipated so far.
Bolivar
I said “The likelihood is that more changes to the currency
may be necessary” and this month three zeros were knocked off the
hyperinflation Bolivar. That is not to mention the cryptocurrency action that
does nothing to improve stability.
Brazil
Brazil seems to be proceeding much as I expected. Not too
bad ( slight GDP expansion after a time of contraction) but with continuing
corruption investigations and accusations.
As expected the currency feel in the first two months
Although it has stabilised a bit, also as predicted, in
March.
Argentina
The economy has grown more than expected in the last year
but the country’s deficit grows. A mixed position as expected. And the
disconnect between government and people I forecast has been reflected in a
series of strikes and protests from truckers to bankers.
Arg Peso
I was wrong about the currency in January – it fell rather
than rose- though by March it appears more in line with my expectations.
Still, disappointing.
Canada
I called Canada ok. The economy is tailing off – although
after the last few years thi sis not necessarily a disaster. It depends whose
opinion you read whether it is weak or solid.
I think it is pretty much on track for my forecast.
Australia
Just wow. Where did I get the idea that Australia politics
would touch on women’s issues in 2018.
Yet it has, I quote from the NY times:
Australia’s
boys-club political culture appeared in recent weeks to receive a healthy dose
of #MeToo disruption.
First… the
lord mayor of Melbourne, resigned after two members of the City Council accused
him of groping them. Days later,… , the deputy prime minister, stepped down
after he confessed to an affair with a staff member and was then accused by
another woman of harassment.
But the economic position is not bad at all and so the
government remains optimistic.
Things won’t really become clear till later in the year.
South Africa
From somewhere I gleaned the sense that January and February
2018 would continue the themes of late 2017. But with some slightly more
positive news around as things are better for the leadership and moderately ok
for the people. And sure enough the
continued pressure on the leadership led to Zuma being pressurised to
transition power to Ramaphosa in a moderately civilized manner.
But I expected financial resource disruptions to continue
and this is true with both direct financial issues and the impact of the
drought figuring even though growth stats were better than expected. The picture
by late March looks optimistic, but we are not out of woods.
China
There was little concrete in my forecast for the first few
months of 2018 in China. Perhaps the most interesting and in a way accurate was
the reference to surprising announcements- although I didn’t anticipate these
would involve visits by North Korean leaders
My forecast is a little out on timing – though within my
margins given that these are long range forecasts- the strengthening I expected
occurred in January and the levelling out in February early March. But overall
the direction was correct.
Shanghai Composite
I forecast big swings in the first few months of the year
and this was correct. I also made
reference to technology- this has certainly been proved right but where as I
thought it would relate to internal technology matters it has much more to do
with market technology questions globally.
Hong Kong $
I expected the pressure from 2017 to continue and this is so
with the currency reaching its lowest level vs the dollar in 33 years. I
expected speculation – it isn’t reported but I am probably correct on this too.
Hang Seng
My forecast was for the index to mess around a bit but end
the quarter where it began and hey presto!. I rest my case!!
Japan
I was correct that recessionary /structural conditions
continue despite policies And I correctly note that there may be issues
relating to relationships with other nations as Japan feels it has been ;eft
behind in the NK situation.
Corruption matters also confirm the demand for changes, even
in relation to the government,
It is harder to assess whether I was right re steps in the
right direction technology and development wise.
Yen
Although the currency appreciated in the first couple of
months of 2018 ( against the $ at least) and there has so far been more
volatility in March. However I didn’t think this would be the focus and I was
right. The BOJ policy on debt issuance also changed in January, another area
where I touched on the core issue.
I expected January and February to be mixed and end much
where it started. However, although the pattern did follow that, there was net drop by the end of February.
March looks like confirming the expected trends for the next
few months- as mentioned in my other market commentaries, technology is the key
but not in the way I expected.
My expectations for more of the same in Indonesia in the
early months proved right including increased low key unrest (deriving from the
mix of different groups). I expected with elections coming closer that this
will continue.
Indonesian Rupiah
I correctly forecast some falls in the currency in January
and February and it looks like March is
also confirming my prediction.
South korea
The winter Olympics meant that as I predicted, the
government and people were as one in the period. However I qualified this with
the belief that it did not change some of the
March to May sees the people in an expansive mood- but not
necessarily a positive one. Financially the country is entering a new phase
which might be unsettled.
North Korea
I rather recklessly forecast that January and February 2018 would perhaps see
less aggravated behaviour from the country and so it proved- although of course
the underlying concerns remain.
As do the economic sanctions which make things challenging.
However I am not quite on the right page with March (
although in a three month period to May a lot can happen) I was right that it
would be a period of change! But I thought that it could be the beginning of a
phase where the leadership is perceived as without clear direction or weak ( perhaps ill) or more deceptive than
normal. Obviously that is not the case –
although one could argue that the current actions suggest a softening of
position. Certainly there are the big
developments I anticipated ( to strengthen the economic position).
I said that it “ may possibly mean more maverick behaviour.
It won’t be clear exactly what is happening. “ And, arguably, while on the
surface accord looks to be the current direction, no one is really sure!
Reading my forecast for the first few months of 2018 is not
particularly enlightening. Probably affair summation but not significant
enough to be able to confirm it at least
from the UK.
Rupee
My forecast makes no sense – on the one hand I saw the currency’s value being undermined but then I
said that values would see a boost – although I did think this could be in tax
revenues which makes more sense in the context.
In any case it is far too early to confirm whether this
period is the long term turning point I predicted.
Sensex
I need to relook at this one soon.
I expected violence to escalate from the start of the year,
but this has not been the case ( there are still events but less than 2016 or
2017).
However, interestingly economically there have been 2
devaluations this year. So there is drama of a sort.
In any case these 3 months were just setting the scene as I
felt that it was all leading to a shift away from the main parties of the past
come the elections. We will see.
Now on to the more interesting areas. I’ve put Russia and
Turkey in the group with Saudi, Israel and Iran this time as to me there is an
important interlinkage – and indeed there are meetings between Russia, turkey
and Iran this week:
Russia
I was mostly right about what I said. The economic situation
( oil prices) have been better and the election was perhaps the non-event of
the millennium with no change in the hold over power.
However I missed some of the global focus on the country –
with the ongoing US farce and the UK poisoning leading to expulsions of Russian
ambassadors across the developed world
Nevertheless I am curious. I said that there could be
misinformation and obfuscation and I think that one should be very cautious
about jumping to conclusions – the astrology was saying there was something
else going on here and we need to keep that in mind before we believe
everything we are told by any party.
p.s. So the Russian disputes have escalated with the Syrian
scenario. But once more we must exercise
caution. I think we do not have the full picture and it may well be that we are
all being serious misled. The question being “if Russia is isolated who
benefits?”- the answer is of course in what they can veto and the extent they
are likely to be acknowledged or ignored- at present the latter is most likely.
So we need to focus on what the likely
consequences are of that. Syria is a
small fish in this regard but gives us an indication of exactly which government is likely to benefit the most.
I thought that January and February would be mixed. I saw long
term underlying weakness with little upward trend in value although occasional
boosts would be likely. A good description of the chart for the period.
The expected March to May volatility has not yet manifested.
But the conditions definitely support nervousness in investors.
Turkey
I predicted 2018 to be a year of surprises relating to the
economy, resources and women.
I was right that the leadership remains supported (
regardless of external views)
However I probably underestimated the economic position
which seems better than expected – although with exports at a record high the
trade deficit remains a problem.
Turkish Lira
I expected that January and February would see some
strengthening of the currency. I was wrong. However, there was a noticeable
lull in its decline over exactly the right period so I am quite pleased even
though I was not totally accurate.
I then said that March would see the return to decline and
so it has proved. So I am overlal pretty pleased with this one.
Saudi Arabia
When I look back to 2018-12 and how lacking in events this
country was ( I compared it to Switzerland) it is hard to believe now.
Obviously the year continued 2017 events as I expected-
continuing issues with Yemen etc, the
ending of the imprisonment stage of corruption sweep, strengthening
relationships with the US and even Israel and the changes for women ( slow but
steady)
The predictions are pretty good so we will see how this all
pans out longer term.
israel
I am not sure that January and February 2018 brought any of
the predicted positive surprises regarding the Palestinian issue. But otherwise
I was spot on .
I said “On the other hand there may be general
dissatisfaction and once more a tendency
for the leadership to overstep its remit. …March to May could see protests and
more. It is quite an unstable time for the people as a whole. Once again there
may be a temptation to harness force to attack others” Unfortunately this has
proved to be the case with the retaliation against the Palestinian protests and
involvement in actions in Syria as well as continuing to beat drums against
Iran. I was also right to see things backfiring as an Israeli jet was downed,
though I believe that there may be consequences to come for the country as it
tries to action its agendas.
I also saw some threat to stability of the leadership which
turned out to be corruption issues. Fair play to the Israeli government they so
seem to trying to be just like everywhere else!!!!
Iran
I though that events could make the leadership less stable
and that there was more evidence now of external relationships being involved
than in 2017. As well as Trump’s rejection of the nuclear deal and consequent
sanctions, Iran has been more in the news regarding the ME ( in relation to
Saudi’s burgeoning relationship with Israel
and its support of Syria) all of which seem to put the country in a less
secure position than last year.
The picture is however, only in the early stages of
development. I expect things to unfold further as the year progresses.
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