Here are mine to kick us off:
FTSE - The QE rally is just getting under way but there will be a big bump due to the end of QE and the election. I expect another rollercoaster year which will be great for trading, if a bit stressful. However, by the year end people will buy into stocks as they prepare for the coming inflation. Expect the FTSE to end up nearly 10% up, shy of 6000.
Stock pick - EMED Mining. Currently available at 11p, this company is re-opening a large copper mine in Spain and is progressing with that permitting that is needed. As the opening gets closer (which is due end 2010, but maybe early next year) the share price will increase to the potential of the revenues from the mine. This should at least go up 300% this year, maybe more.
Oil Price - With all the predicitions, there is a lot of capacity out there in the oil market thanks to the recession. As such although the price will be volatile, it overall will bounce around the level it is now, unless there is some huge shock like the US attacking Iran.
UK Politics - The election is pretty much settled now that we are so close to the General Election. My bet will be on the Speaker of the House of Commons holding his Buckingham seat against Nigel Farage.
Public Spending - Whatever the results of the election, we will see and Irish style cut in spending or else face the IMF coming in to bail us out. The politicians may manage to avoid this, but the cuts will cause widesprad strikes and unrest as the recession catches up with the public sector.
The public sector cuts one is a non-starter. The only thing keeping the economy going is the public sector right now and remember - they didn't create the financial mess we're in.
ReplyDeleteSo, I say again - what's the point of removing the support tubes?
Paul: "The only thing keeping the economy going is the public sector right now .."
ReplyDeleteI believe you have it exactly wrong. The public sector spends half the wealth generated by the private sector. Itself the public sector creates very little wealth, swinging cuts would be a good thing for the economy, if not for the individuals currently given alternative unemployment benefit.
Paul: "and remember - they didn't create the financial mess we're in."
That is a matter of opinion, the public sector regulators didn't do their job of regulating the banks, so, I think in that instance, the public sector is as culpable for the situation we find ourselves.
Right, we'll hold you to these.
ReplyDeletePaul, welcome, it is not true that Government spending is the only thing holding the economy together. The biggest drag on wealth creation is the enormous tax burden and the incrasing public deficit.
ReplyDeleteYou can't borrow your way out of a debt crisis.
It is wishful thinking to think there will be anything other than massive cuts, already the government is really talking about 10% over 3 years in most departments - they are just lying to the media and people about the truth.
if we dodge the issue then the IMF will come in and do the job of the politicians for them.
Watch out for food prices.
ReplyDeleteThese adverts for scrap gold are the scary ones for me and the prices they pay are a pittance, 30% of the gold price someones stock piling expecting some bad times.
ReplyDeleteFive? That's a lot. I don't find myself in much disagreement with you either.
ReplyDelete1) Placing a spread bet that the S&P500 goes up (1117.8 as I write) with a stoploss at 850 points will make you more money than you can in the bank.
2) Betting on England to beat Pakistan in the home test series unless the odds are below 1/2 (in a 4 match series they should be higher) will make you money too.
3) UK GE before the budget.
4) B of E rate to be 0.5% at the end of the year, LIBOR to be fine and just a shade higher, government borrowing costs to have risen and mortgage rates to have risen.
5) New government to put in place plans to sell off the motorway network.
Paul's attitude is exactly why we are in this mess, and exactly why Labour always fail.
ReplyDeleteGovernment spending is always a drain on the productive economy. It may be nice to have (some of it and sometimes, at least) but like butter on bread if you have to forgo the bread to get the butter you are the loser. The public are now taxed until they are impoverished to feed the voracious state.
And Paul's statement "they didn't create the financial mess we're in" shows the duplicity and cunning of socialist politicians. Brown boasted about how well he was running the UK economy; he cannot now shirk responsibility for the subsequent mess.
In fact the housing boom engineered by Brown, with his ridiculously low CPI based BoE rate, has caused endless trouble from bank failures to negative equity to an over indebted public. Brown made a mess of the regulatory regime for British banks with the half baked FSA; praising and knighting the bankers; encouraging bank, business and personal debt; and ignoring warnings.
Moreover the worst long term effect of the recession is the fabulous government debt that Brown has incurred. The public will take decades to pay it off and in the meantime suffer reduced services to pay Brown's interest. And nobody else can be blamed for that.
Amen to Budgie.
ReplyDeleteI agree with all that Budgie says.
ReplyDeleteTo add:
1. The stockmarket will remain strong. This is hardly rocket science as inflation looms in late 2010 and 2011. Two thirds the earnings of FTSE companies comes from overseas. This country will have to make asset sales.
2. 'Individual responsibility' will usher in a period of austerity. The standard of living in this country for the majority remains too high and the adjustment period is only just beginning. Plastic will be out of fashion.
3.Initially people will extend their mortgages to sustain their life styles, just as corporate debt has been restructured this year. This provides the banks with an initial fillip from fees, but it is bad news for them and customers longer term. This trend may help offset the effect of the inevitable rise in mortgage rates.
4. The cost of chocolate will rise (maybe this is what Demetrius hints at) but commercial property values will decline (avoid over extended commercial property companies despite the prospect of inflation). The oil price will not break out of its trading range (which coincides with City Unslicker), but gold and other natural resources will strengthen on the back of further Chinese investment with global demand picking up.
5. Israel will stir up trouble as a reaction to the international condemnation of its treatment of the Palestinians.
Excuse me if a silly question... What is correlation between inflation and ftse? Historically has high inflation always fueled ftse?
ReplyDeleteHow do you arrive at a 300% increase prediction for emed? I am always very wary of mining/oil shares as can have quick peaks and huge falls!!
(As Paul said) The money being pumped into the the economy by spending more on the public sector that the govt receives in taxes has kept the economy going at roughly the same pace as it was (that and QE and and and...)
ReplyDeleteThe 'support tubes' have to turned off at some point to pay the bill - do not forget that the Govt only promises to halve the running deficit in 4 years - ie get borrowing to pre-recession levels - never mind paying anything back.
The interesting thing is how the taps are turned off
-Too fast and we hit another nasty era of depression
-Too slow and we hit another nasty era of inflation
The Japanese have not had much fun for a decade.
Through a process of sheer incompetence, we might get it right. The smart money seems to be betting on inflation.
Personally I think that when the Cons win the next election, they may well cut too deep as they can blame all the bad consequences on Labour, and hope that things get better by 2015
Anon - have no fear about the cons cutting too deep. They have already made loads of commitements to not relly do too much to the real high spending departments - so no chance of that.
ReplyDeleteThere is no such thing as cutting too deep into the ranks of diversity councillors and five-a-day consultants.
After reading the Telegrapgh this morning you can adde veryeone working at oftsed to the list.
In the UK it will end in inflation. Whether that be 7-8% or 15-20% is the question to which I don't know the answer.
RM - re EMED - see the Fox-Davie note on them for a good valuation analysis. http://www.google.com/url?q=http://www.fox-davies.com/media/74687/emedminingflashnote12october2009.pdf&ei=u6s_S4D-ONirjAfVuLyADg&sa=X&oi=nshc&resnum=1&ct=result&cd=2&ved=0CAsQzgQoAQ&usg=AFQjCNEdPqOV26nQZCs4vSgev2_dvuonmA
Any resolutions for next year?
ReplyDelete