Marina asked me about my predictions for the next 6 months or so in the Financial markets and the Economy in general. ok. Here are my predictions for the next 6 months:
-Inflation sneaks up higher. It has to. Take China. The inflation there (6.5%) is the highest in 11 years and all due to food becoming costly. It will trickle down to the rest of the world. It already has. Wheat has gone up significantly already. Lowering interest rates will also aid higher inflation.
-The next report from the Labour dept is definitely going to show job losses. Lower GDP. Possibly a -ve GDP. So I think we will technically be in recession.
-Crude Oil is going to hit $90. More demand in the winter, delay by OPEC to increase production, lower current inventories, and the possibility of a confrontation with Iran. All of these will contribute to this increase. I would also watch out for the trouble brewing in Pakistan. There is potential for that to spread to neighboring Islamic nations and trigger bigger trouble.
-Housing market is going to further slow down. Defaults continue to rise and so do discounts being offered by sellers-indications of a severe deflation in value. If inflation goes further up, there is potential for that to impact mortgage payments of prime mortgage owners as well. All in all this could be the recipe for a significant correction in the housing market. A majority of the ARMs come off in November 2008 so mark that month down for some intense activity.
-Retail sales are going to suffer as well. Dont believe the bs that CNBC is feeding you. I watched a piece on CNBC this week where analysts (in collusion with the industry) were predicting strong holiday retails sales this year. Really? And how Einstein are people supposed to pay for their iPhones and gadgets? More credit? Really?
-I hope Bernanke does not cut rates again in October. Not going to be good for inflation kids! If I were him, I would let the carnage in the markets continue. The bubble that arose due to indiscretionary borrowing has to completely burst, I mean there should not be any indications of frothing when all is said and done. 'cause you know this kids: if froth builds, bubbles are next! Let the housing market correct itself. Let the institutional lending and liquidity matters correct themselves. Let the uber-bulls and financial predators realize that the byproduct of taking high-wire risks is not always a one-way path. It could lead to failures as well.
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2 comments:
Well, you can make money on stocks when they go down as well :)
and from the Forex as well. What do you think it will happen to the dollar????
Too bad I do not have any money to play right now...
I agree with the forecast. May be I should be studying economics...
I think this will be the biggest recession since the one on 1929, may be similar or even worse...
I saw all these same signs happening in my country before catastrophe hit 3 years ago. 30% unemployment and everything went up 3 times the price from one day to the next, due to a readjustment on the Dollar/Peso exchange.
On top of that, I think the recession will be worse than it supposed, due to the fact that Financial companies will be trying to make money out of this as well. Bidding against the dollar and over selling stock to make it go down and make a buck.
Robert and I already said we are moving out of the country for a while if that happens...
Dude,
your predictions are all wrong. You watch too much TV.
Here is what will happen over next 12 - 15 months
We invade Iran. Reason this time will be to search for WMD not found in Iraq. We will get their Oil too making the US the largest member of OPEC.
Oil prices will come down to $40 after we beat the crap out of Iran.
Fed will lower rates further to help their wealthy friends and brokers. House prices rebound and mortgages again become available to everyone (after all the Fed has to help the poor guys losing their houses)
Pakistan becomes center of Democracy. Musharaf for nobel peace prize.
Hilary wins next year, raises taxes, capital gains go back up,free health care for all, Budget deficit becomes surplus just like under Billy boy and we have economic nirvana. We move to Canada when she becomes the Prez.
Forget about the Sox dude, root for the LSU Tigers. Look at the SEC, beating each other up. Yesterday, Bama lost to GA. I think a one loss SEC team is better than no loss PAC-10, Big 10 teams. BWDIK, friggin the media just sucks up to f..kin losers. Wonder why the Big10 commissioner opposes the playoff system?
Enough of ranting.
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