March hares, lions and lambs
I'm very aware that I haven't given a general forecast for 2006 yet, I would if I could with any reliability. Things could turn on a sixpence (quaint, once silver, UK coin about the size of a current UK 5 pence or US dime, it equates to current UK 2.5 pence which ain't so far from a dime). I can tell you when those turning points are most likely to be, approx 2 weeks either side of these dates: 30th March, 6th June, 10th September (but note that I have a slight problem with future time and tend to see things as sooner than happens, trying to improve this flaw).
Those feel to be the times of greatest risk this year, a sharp change during one of them could shape the future irrevocably, quite possibly change everything. The March period felt quite bad in late summer last year but has eased a good deal since December, that has let me see a bit further and identify the June and September times. September is a kind of unavoidable one, it will be quite seismic economically unless things haven't unwound dramatically earlier: if the present 'phoney war' of markets and reality hasn't begun to seriously resolve before then it will with a vengence, US$ and stocks in particular. June is more interesting, more a will it / won't it, political / geopolitical. If that happens then things move forward time wise and Bush has a hard job lasting out this year. I'll know more about these times in a couple of months.
Which brings me to March. "March comes in like a lion and goes out like a lamb" is an old saying about British weather (I think known from Shakespeare). This year the converse may be true, I expect severe squalls of geopolitical and economic / market related kind late in March. The Fed's continued pumping of money into the markets is keeping them up for now, I don't expect that to work so well for much longer but it will take a sharp knock on the markets' thick skulls to effect that change. Both oil and gold should be dropping now, based on data and fundamentals - they will but that will only be a very brief (between a couple of days and a handful of weeks) window before their next leg up happens. When it does the US$ and US stocks will dip in tandem, DON'T be tempted to buy on the dips since drops of 5%+ are quite possible. Oil has to drop to below $56 (Nymex light sweet crude) to invalidate these predictions.
More practically, the US trade deficit and OPEC meeting around 9th March look the first risk, TICS data on 15th another. Iranian oil bourse (IOB) opens on 20th, Israeli elections 28th. I really do not expect the IOB to be significant, look to June to be more dangerous if I'm wrong rather than some silliness to pre-empt its opening. Israeli elections are always an iffy time, both in their happening and their aftermath but I expect Ehud Olmert to be able to form a solid government with his Kadima party in coalition with Labor. That would likely be the most safe result for a reasonable Israeli regime, which is what they need now.
The first pebbles of US real estate and consumer spend decline have begun to spread their ripples, how long can the wind of Fed helicopters suppress them in the unreal world of the markets?
Meanwhile, in the real world, climate change accelerates, peak (all liquids) oil production remains at May 2005 [December just topped it - barely, but it will decline in January, March 8th correction], H5N1 flu infects a cat (some good news, LOL). Iraq continues its slide towards civil war, perhaps we are nearing the time to define what that means in modern terms.
Expect a madder than usual March, if not then you (and GW) should fear an even worse June, September will be 'bad' on the markets regardless.
The above was written on 28th February. March 8th additions: Gold probably made a short term bottom today (I cashed my shorts and bought, anyhow, missed the last $3 of the move though, bummer); oil should drop further from its current $60 but I wouldn't buy or sell until it makes a decent move up when I would hope to catch the move; stocks might blip up Friday if the NFP jobs data is strong (apparently whispers say it will be) but I would see that as a selling opportunity since the next 6 to 8 months should be mostly and possibly strongly downwards. I think the US$ has made a top in the last week and expect its decline hereafter, tomorrow's trade deficit and next Tuesday's TIC data will probably push down, Friday's NFP may push up. No significant changes in geopolitics in last week (OPEC didn't reduce production), they are much more likely in late March.
Those feel to be the times of greatest risk this year, a sharp change during one of them could shape the future irrevocably, quite possibly change everything. The March period felt quite bad in late summer last year but has eased a good deal since December, that has let me see a bit further and identify the June and September times. September is a kind of unavoidable one, it will be quite seismic economically unless things haven't unwound dramatically earlier: if the present 'phoney war' of markets and reality hasn't begun to seriously resolve before then it will with a vengence, US$ and stocks in particular. June is more interesting, more a will it / won't it, political / geopolitical. If that happens then things move forward time wise and Bush has a hard job lasting out this year. I'll know more about these times in a couple of months.
Which brings me to March. "March comes in like a lion and goes out like a lamb" is an old saying about British weather (I think known from Shakespeare). This year the converse may be true, I expect severe squalls of geopolitical and economic / market related kind late in March. The Fed's continued pumping of money into the markets is keeping them up for now, I don't expect that to work so well for much longer but it will take a sharp knock on the markets' thick skulls to effect that change. Both oil and gold should be dropping now, based on data and fundamentals - they will but that will only be a very brief (between a couple of days and a handful of weeks) window before their next leg up happens. When it does the US$ and US stocks will dip in tandem, DON'T be tempted to buy on the dips since drops of 5%+ are quite possible. Oil has to drop to below $56 (Nymex light sweet crude) to invalidate these predictions.
More practically, the US trade deficit and OPEC meeting around 9th March look the first risk, TICS data on 15th another. Iranian oil bourse (IOB) opens on 20th, Israeli elections 28th. I really do not expect the IOB to be significant, look to June to be more dangerous if I'm wrong rather than some silliness to pre-empt its opening. Israeli elections are always an iffy time, both in their happening and their aftermath but I expect Ehud Olmert to be able to form a solid government with his Kadima party in coalition with Labor. That would likely be the most safe result for a reasonable Israeli regime, which is what they need now.
The first pebbles of US real estate and consumer spend decline have begun to spread their ripples, how long can the wind of Fed helicopters suppress them in the unreal world of the markets?
Meanwhile, in the real world, climate change accelerates, peak (all liquids) oil production remains at May 2005 [December just topped it - barely, but it will decline in January, March 8th correction], H5N1 flu infects a cat (some good news, LOL). Iraq continues its slide towards civil war, perhaps we are nearing the time to define what that means in modern terms.
Expect a madder than usual March, if not then you (and GW) should fear an even worse June, September will be 'bad' on the markets regardless.
The above was written on 28th February. March 8th additions: Gold probably made a short term bottom today (I cashed my shorts and bought, anyhow, missed the last $3 of the move though, bummer); oil should drop further from its current $60 but I wouldn't buy or sell until it makes a decent move up when I would hope to catch the move; stocks might blip up Friday if the NFP jobs data is strong (apparently whispers say it will be) but I would see that as a selling opportunity since the next 6 to 8 months should be mostly and possibly strongly downwards. I think the US$ has made a top in the last week and expect its decline hereafter, tomorrow's trade deficit and next Tuesday's TIC data will probably push down, Friday's NFP may push up. No significant changes in geopolitics in last week (OPEC didn't reduce production), they are much more likely in late March.
posted by Agric | 23:28
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