Ok – I’m trying to make some predictions about how 2013 will look like.
If we review 2012 – the difference between the real economy and the stock markets has never been bigger. People who think that the stock market is telling you how the real economy is – are wrong imo ! The stock markets is only at those levels cause of cheap money from central banks all around the world.
SPX and markets is now close to ALL TIME HIGHS and the economy is LONG AWAY from their all time growth – just look at especially Eurozone which were in RECESSION in 2012 with unemployment rates at extreme high levels in the southern countries.
Once again the swings up and down in the markets has been quite big and this is excellent if you swing trade (hold for weeks/months) as you can capture the moves both up and down. Early 2012 has been very bad for me – but last half of 2012 has been very good. I’ve learned my lessons the hard way too and will always try to improve myself to get better. Remember there is no one who can really “predict” what will happend – neither me , but I will come up with what I think is most likely during this year.
1) I believe that the stock markets in the US and Europe will have wilder swings than before , both up and down. People who can catch the swings will make a fortune instead of being permabull or permabear!
I think it is very possible we could see new highs coming sometimes during the year of 2013, probably all time highs on SPX. But remember the weekly and monthly charts suggesting to be careful going long blindly as we could easy see a sharp drop in the markets anytime during the year.
2) I remain bullish on GOLD and SILVER – we might see some sideways trading but eventually I believe both are going higher. Gold might see 2000-3000$ area – this is also due to central banks around the world flooding the system with cheap money. This will devalue the currencies and be bullish for gold/silver.
3) The US bond market (10 year note and 30 year) is in a massive bubble still – I believe finally bonds are topping out based on the monthly/weekly charts suggestion that bonds should probably have topped out and begin a new “bear market”.
4) I favour the US dollar in 2013 for several reasons. First of all USD is the world reserve currency and as I believe that the US will do better than EU – I think this would put more pressure on the euro than the dollar. There will be more downside risk in 2013 with the eurozone and therefore put a pressure on euro cause of these debt worries. However the swings in euro and dollar will also be voilatile.
5) Fiscal policy will stay tight or will become tigther in the US and Eurozone. This is because of the growing. Debt/GDP ratios which is unsuistainable. Austerity measures in southern europe is damaging the growth. Especially France will be hit hard in 2013 – cause of mad politics by Hollande with 75% tax on rich and he will make it harder to fire people, therefore also harder to hire new people. Moreover France got a very high spending to GDP ratio which is unsuistainable.
6) Central banks will be waiting and be on hold as they flooded the world with cheap money in 2012. They wanna see if the growth is picking up again – and if it is , they will take a more neutral stance on the policies. They used more or less what they got as Ben Bernanke announced QE infinity in 2012.
7) Commodity prices will remain choppy up and down like in 2012 – It is very possible we see a big rise in oil during the year 2013. Middle East could also be a trigger for oil going higher during the year 2013. My bias on commodities is up this year – but could very well be choppy as the weak growth in Eurozone might put a pressure on commodities.
8 ) China has been slowing down over the past years from 10% to 7.5%, but there are some signs that China may pick up some momentum in 2013. With stimulus in China coming into the markets and possible more stimulus in China, should help China not going into hard landing. China could see growth around 8% in 2013.
9) European growth will be very weak in the south and a bit better in the north. All the southern countries should have negative growth with countries like Denmark, Germany, Netherland etc have better growth but still near the 0%. So all in all the southern countries in Eurozone should still be negative during the year and in recession. This is cause of strict austerity measures and high unemployment rate with the northern countries stronger.
10) In the US we could see more of the same – possible around 2% growth during the year. I think US will be stronger than in Europe , cause they dont have much austerity in US. As they keep flooding the mkts with cheap money – and if there is no big disaster, US could stabilize. The housing market especially in US has also been stabilizing during 2012 also helping out on the real economy. Moreover the companies and people has been better to “cut spending” and save over the last years than the government.
Conclusion: All in all – 2013 could be a very well year as all the central banks has flooded the world with cheap money in 2012. This usually helps a bit , but not much – I think QE does not work but it holds back the “real recession” and kick the can down the road in the future. So we might see global growth hold up this year cause of the huge monetary stimulus.
Also the concerns about “fiscal cliff”, “Eurozone debt crisis”, “China hard landing” , might not be a big worry anymore as everything is pretty much well known to the markets already. Of course if Eurozone and everything gets worse or we see a country leave the eurozone, this would be a trigger for more downside – but overall I think these big worries will be less than in 2012. So overall 2013 could see a possible pick up in growth with China and US leading – Eurozone will still be the “weak” card imo.
I wish everyone a happy new year and best luck to everyone !
