Tuesday, May 28, 2013

2013: Mid-year review

Well, it's almost June. I figured we'd review the 2013 trends and see how we're doing.
The biggest result of "going off the cliff" as it were is going to be a complete destruction in confidence. Uncertainty is certain to take hold once the eurphoria of the "fiscal cliff deal" wears off and the massive budget problems that are becoming unavoidable take hold. This year may set a record for market volatility. In particular I anticipate a bull run on oil which may even hit $110 as certain data in the areas of U.S. manufacturing and emerging markets again fool people into believing a "recovery" has taken hold (think back to the first 6 months of 2012). Just as it happened last year as well, I believe that low oil prices will be driving this "recovery" and high oil prices will halt it.

During this time, I expect lots of hawkish sentiment from Canadian officials and economists, with healthy regular doses of skeptism for effect. This will be despite the massive warning signs from the U.S. as Canada's "public face" to it's economic policy is
resource extraction with a focus on "emerging markets".
Oil is performing weaker than I expected though that hasn't altered anything, gas prices are still going high very quickly, and this is the precursor to a new collapse in growth. Oil may still meet my expectations though as there's still a little room and time to grow. You'll also notice that general sentiment towards rising interest rates has reversed.

Crude oil rallies sharply after U.S. data, OPEC meeting in focus
Crude oil futures were sharply higher on Tuesday, as sentiment improved following the release of stronger-than-expected U.S. housing and consumer confidence data.
Oh yea, want to know the good news?

US home prices rise 10.9 pct., most since 2006

Higher prices! Exactly what nations and people struggling with high levels of debt need.
U.S. home prices jumped 10.9 per cent in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.
The Standard & Poor's/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month. 
Yep, all of a sudden major bubbles in U.S. housing are a "good thing". You'll love the "why" part:
The U.S. housing market is steadily recovering, buoyed by solid job gains and near-record low mortgage rates. Sales of new homes rose in April to nearly a five-year high. And sales of previously occupied homes ticked up in April to the highest level in three and a half years.
Oh no, this certainly isn't going to be anything like last time right?

Wall Street's Congress Investment Yields Dividends In Deregulation Votes 

No, not at all.

This latest burst of growth again won't be lasting long as the quickly rising prices everyone is praising soon overwhelm those who actually have to pay them. Last year provides a good example however this year things are even less stable and as a result the dip that should be arriving within the next 3-5 months may not resemble the collapse in demand and prices of last year. The spread between oil and gasoline right now provides some example of this.

And when it comes to the "fiscal cliff", well...

US Treasury secretary says he has begun tapping federal retiree pension fund to avoid default

That's probably not going to help things now is it? Somewhere in the "economy" equation, affordability has been lost. Where all of these economists seem to get it wrong is to think that isn't going to hurt anything.

I think the rest of my breakdown speaks for itself, however something of interest to note is the combination of the mass record breaking protest and localisation trends in the form of the global Monsanto march. Very positive development.

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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