Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

[vt]

For example will Trump bring any success in growing the U.S. economy more?

[shiny!]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Happy New Year, everyone!

I think the dollar will get stronger and PMs will stay in a slump.

[GRG55]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

No US recession in 2017.

[dcarrigg]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

For example will Trump bring any success in growing the U.S. economy more?

The President has a lot less to do with the economy than people think.

There has never been a full 10 year stretch without a recession in American history. We're at 8 years without one now. There are always firsts. But what are the odds the business cycle just disappears and recessions stop happening?

My guess is Theranos wasn't a one-off case. I bet you more than half of Silicon Valley is smoke and mirrors.

House prices are back over bubble levels in many metros. We've got a bit more leeway as long as commodity prices stay down. But corporate bonds are still in unprecedented territories.

The tough part isn't seeing how it plays out. It's timing. I thought for sure we'd hit it in 2016. But I didn't foresee what GRG did and the massive oil price crash.

Still, if I can't time it, I'm pretty sure that it's coming sometime during this administration, if not in 2017.

[anayder]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Shiny, I found this interesting about the dollar. Wilbur Ross (Trump's Commerce Secretary) on twitter said the following:


"We are being killed on trade, killed on exports and have a record national debt and trade deficit. Currency manipulation is semi responsible"

"Janet Yellen spent the last 4 years warning of the bad side effects of a strong dollar yet now Donald comes to power she becomes a hawk and threatens to raise rates 3 times next year. The dollar is at a 14 year high yet all of a sudden the strong dollar is of no concern to her."

"Currency manipulation, causing an overvalued dollar has led to a catastrophic trade deficit ......"

"Japan (kuroda), Europe (Draghi) and China will be on the administrations watch list for currency manipulation."

[Mega]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Oil $ 45-60
$ still strong ish
£ 1.18 to $
Gold $1275-$1400 ish

A lot less WAR............improved relations with Russia

[Thailandnotes]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

RMB loses 1/3 of its value against the $.

[GRG55]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

RMB loses 1/3 of its value against the $.

I suppose anything is possible, but a policy error of this magnitude by Beijing will send the global economy into a depressionary tailspin of unimaginable proportions. Scroll up and read the post by anayder if not clear why that will be the case.

[Thailandnotes]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

I suppose anything is possible, but a policy error of this magnitude by Beijing will send the global economy into a depressionary tailspin of unimaginable proportions. Scroll up and read the post by anayder if not clear why that will be the case.

Have a friend who lived in Thailand during the '97 currency devaluation. Now lives in Shanghai. He said there are many things happening in China similar to what happened in Thailand during the run up. Big ticket items are 5-8 percent off if you pay in dollars which means the currency has already been devalued underground. Currency flight accelerating and becoming a common topic of conversation.

Kyle Bass...you can find the whole hour interview on youtube...this is just 5 minutes.

https://www.youtube.com/watch?v=muHaeTOFYDs

[GRG55]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Have a friend who lived in Thailand during the '97 currency devaluation. Now lives in Shanghai. He said there are many things happening in China similar to what happened in Thailand during the run up. Big ticket items are 5-8 percent off if you pay in dollars which means the currency has already been devalued underground. Currency flight accelerating and becoming a common topic of conversation.

Kyle Bass...you can find the whole hour interview on youtube...this is just 5 minutes.

https://www.youtube.com/watch?v=muHaeTOFYDs

Yes, we have been listening to Mr. Bass' persuasive delivery of his argument for some years now. Once again, in this crazy world almost anything seems possible. But hedge fund managers like Kyle Bass become 'rock stars' when they make a big hit on a macro situation that allegedly 'nobody saw coming'. KB's fame came from his successful positions in advance of and during the 2008/09 financial crisis. I don't think he's made a single significant correct call since.

if he is right about China then one needs to be long guns, gold and bunkers.

[Thailandnotes]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

long guns, gold and bunkers.

Ok, Bass is on the extreme end, but nobody is predicting the RMB will appreciate. Conservative forecasts are for a 5% depreciation with a 20% reduction in China's foreign currency reserves. If the currency is forced to float, there will be a stampede. I'm not sure it will lead to upheaval in North America.

Many predict a devaluation and then a strong rebound in Asian economies in '18 and '19.

My friend in China said the real tip off was that for years foreigners working in China have been promised a salary in dollars and been paid the equivalent RMB. For many companies and organizations that has ended in the last year or two. Foreign employees see their wages rising in RMB, but can't convert that to the same amount of dollars they used to.

[GRG55]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Ok, Bass is on the extreme end, but nobody is predicting the RMB will appreciate. Conservative forecasts are for a 5% depreciation with a 20% reduction in China's foreign currency reserves. If the currency is forced to float, there will be a stampede. I'm not sure it will lead to upheaval in North America.

Many predict a devaluation and then a strong rebound in Asian economies in '18 and '19.

My friend in China said the real tip off was that for years foreigners working in China have been promised a salary in dollars and been paid the equivalent RMB. For many companies and organizations that has ended in the last year or two. Foreign employees see their wages rising in RMB, but can't convert that to the same amount of dollars they used to.

i believe it dropped about 7% against the US$ in 2016?

another 5% is probably manageable, especially since the PBOC is now preferring to reference against a basket of trade partner currencies, so it can be made to look less dramatic.

Foreign currency reserves are dropping in places like China and OPEC in part because the easy money days for their economies are over and they need the cash.

However, China cannot afford a rapid, large devaluation without triggering trade sanctions from the USA and the beleaguered EU. The Trump Administration seems less tolerant in that regard than the outgoing folks. And so the contraction in global trade accelerates rather dramatically.

[bpr]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Shiny, I found this interesting about the dollar. Wilbur Ross (Trump's Commerce Secretary) on twitter said the following:


"We are being killed on trade, killed on exports and have a record national debt and trade deficit. Currency manipulation is semi responsible"

"Janet Yellen spent the last 4 years warning of the bad side effects of a strong dollar yet now Donald comes to power she becomes a hawk and threatens to raise rates 3 times next year. The dollar is at a 14 year high yet all of a sudden the strong dollar is of no concern to her."

"Currency manipulation, causing an overvalued dollar has led to a catastrophic trade deficit ......"

"Japan (kuroda), Europe (Draghi) and China will be on the administrations watch list for currency manipulation."

Interesting, thanks. Coincidentally, our three largest foreign creditors.

It's starting to come together in my mind, finally, how this is going to play out, but the timing will be impossible.

DJT did campaign on a platform of US default, and it's the one campaign promise I believe he will keep, given his use of bankruptcy as a business tool. And up until now the dollar's strength does not jibe with a debt default: was no one listening to his trade war talk and how he was going to buy back our debt at pennies on the dollar? Surely being the prettiest ugly can't undo that, right?

Well, it can, for a time, and first he's going to raise that debt limit. New highways for everyone, all leading to the casino built into the middle of that wall. Spend, spend again, then default.

But by labeling the currency manipulators early it creates the conditions for a "justifiable default," or a re-valuation of the reserve currency in order to reduce the debt.

My prediction: No recession in Trumpland. If the data shows it, GDP will be revised upward and the BEA might stop releasing data altogether. Same with Fed: restrictions on all those juicy datasets out of St. Louis if the data are uncooperative.

[thriftyandboringinohio]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

Thanks bpr.
It might be worth the time to think through just how events might unfold after a US default.
You lay out a good case for it considering it.

[Chris Coles]

Re: Happy New Year Everyone. Any Guesses On 2017 Markets And/Or Global Activities?

I suppose I am taking the same line as Putin, we have to wait for President Elect Trump to take office before making any decisions; what Trump, (and not forgetting his surrounding team), sets into motion during the first month will define his entire presidency; only then will we be able to make meaningful predictions.

For what it is worth, it is surely time to recognise that the present economic model, underpinned by constantly rising asset prices; must eventually fail. As others have already noted; timing is indeed, moot!