Friday 13 January 2012

The World just refuses to end, again

Chart forFTSE 100 (^FTSE)

One thing that gave me hope at the end of 2011 was that everywhere I looked I found bearish prognostications about 2012. Not just the ludicrous Mayan Calendar stories (the calendar stops because they ran out of wall on the temple, sigh), but that the Eurozone was finished, along with America and China - plus Iran was going to cause World War III and the Arab Spring would unravel.

The hope was that of course in life i have seen when everyone agrees on something, they are usually wrong. It is one of the nice little ironies of life.

Thus far this year, in terms of markets and economic data at any rate, the contrarian Bullish position has been proved correct. Volumes aren't too bad and markets are up. The moving average of the FTSE is in a steady upward move, even if this move is a rather shallow one.

Moreover, data suggests the UK has avoided recession in late 2011 despite the catastrophic macro events that took place - this is quite encouraging. The US too is up for a modest recovery. Only in Europe are things not really improving and there massive cheating by the Central Banks is calming the bond markets for now.

I somehow doubt the doomsayers are totally wrong and can't see 2012 being a good year. I am reminded though that 2011 was going to be a good year, the first year of proper growth since the recession with the FTSE predicted to be at 6500+ by many analysts. It turned into a bust with a 7% decline. So perhaps this year will be better than expected, which if all it means is the end of the World refuses to happen, well then that is fine by me.


Steven_L said...

the contrarian Bullish position has been proved correct

and the 2012 holiday fund is looking all the healthier for it. Keep thinking about ditching the banks and Aviva today though.

Budgie said...

"when everyone agrees on something," like "the Eurozone [is] finished ..."?

Not me. The euro will survive, the EU psychopaths will ensure that.

But we will have turbulent times, so I would not count on a smooth rise.

Timbo614 said...

CU makes upmarket blog and MARKETS FALL!! France, Austria and Euro is still F'ked says S&P.

The difference an hour makes :(

Budgie said...

Rumours that France is about to lose AAA rating.

CityUnslicker said...

typical Timbo - still, nice to laugh at Sarkozy.

Timbo614 said...

Will we laughing - ultimately?

I think not - it's the start of the core rot. Seeds of monetary revolution...etc.

Anonymous said...

It would be a very good thing if the UK too were to lose its AAA rating That would jolt us out of our complacency. We have record levels of public spending (or public squandering) and an inexorable rise in the National Debt.

Any attempt, however modest, to check this unsustainable course is met with howls of rage and snivelling about "savage cuts" -- led by the publicly-funded BBC. It is remarkable that they haven't tried to put the blame on "hard uncaring Thatcher" once again.

A reality check by the ratings agencies is long overdue. Last time round it was the IMF who provided the necessary corrective.

Budgie said...

Anon 10:24am - I agree with you that the UK government needs a shock. Yet the result of a downgrade just makes borrowing more expensive which itself is not helpful.

Somehow the ("Tory-led coalition") government has to to be made to be more realistic. Its absurd money wasting (euro bailouts to the IMF and Eire - £50bn; more of the same in prospect; HS2 - £32bn; DfID - £10bn annually; eco loonery - £billions; membership of the EU - £100bn annually; etc) has to stop. Quite how we do that I don't know.

Anonymous said...

Now even Ed Balls are agreed Gideon's 'Plan A' is the only game in town!