09 economic predictions.

[topcropper]

OK, this is a bit of fun and not to be taken too seriously, cause we all know that nobody knows whats coming, but it could be interesting to look back on in 12 months.


Whats the forecast for Dec 31, 2009..??


Property.
I reckon cheap capital city property to be flat. Rents unchanged.
Expensive capital city property fall another 10%, rents also down 10%
Regional property, fall another 10%, rents flat.


Shares.
Australian share market up 20%, although banks flat and plenty of financial and spec mining stocks go bust.
Overseas shares, up 10%.


Commodities.
Oil, $80 per barrel. Others, recover 20% up. I'm talking daily traded commodities here. Untraded ones like coal and iron ore are in for some massive falls.


Unemployment. 8%.




The global credit crisis will gradually be seen as what it really is. An asset devaluation caused by excess of debt and easy credit in the Western world economies, that then spread world wide. We [western nations] were living beyond our means, and doing it on borrowed money. Not enough real production, and too much services and consumption. We are undergoing a deflation of that bubble.

The sub prime, and subsequent debt crisis were not the cause, but only the trigger that set things off. This economic crisis was always going to happen, it just needed a trigger.



All complete and utter speculation. Don't expect a reply from me as I'm walking out the door to go camping for a while.

See ya's.

 

[PrimeCommercial]

Property.
Rents - Flat to trending upwards
Prices - Flat in most capital cities falling in some regional areas.
Official RBA Cash Rate - maybe another 50 points in it and no more than 50 points higher. Current 4.25% So 3.75-4.75% range


Shares.
Australian share market up 40% from low to ~5000

Commodities.
No idea

Unemployment.
<5%. Getting higher after 2009

In general, Australia my or may not fall into recession but we are tinkering on the edge, not much if any growth in GDP in 2009 so we may have to wait until 2010-2013 for a significant recovery.
This is just a part of the economic cycle that we have seen many times before. I dont think we have hit the bottom yet but its not far away and we will stay there for the rest of 2009.

My assupmtions could easily change in response to a world event. Nothing boosts an economy quite like a war.

 

[markpatric]

Who knows, but I don`t like the outlook for the US.
Billions of dollars in debt from a war which most agree was wrong, yet they are flooding failing institutions with many more billions of dollars from where?.

 

[Ausprop]

I reckon

oil at $80
low end property flat, high end off 10-20%
stocks at 4300
return of inflation... could be a little early for that.
interest rates trending up
USD parity

 

[Novar]

I'm still looking for my crystal ball !

 

[vbplease]

Shares.
Australian share market up 20%, although banks flat and plenty of financial and spec mining stocks go bust.
Overseas shares, up 10%.

Hi TC,
If the share market is to go up 20%, I'm interested to know which sector's you predict to go up?

Considering nearly half the ASX 200 is made up of the banks and resource companies.. I also think the retail companies aren't going to have a bumper year considering people are worried bout keeping their jobs.

 

[ziggy2214]

Property.
Rents - Flat in most areas
Prices - median to fall in most capital cities but outer suburbs should see some gains due to first home buyers and the FHOG
The RBA Cash Rate will probably drop a little but I'd expect it to stay around 4% for a long time.

Shares.
Australian share market up by at least 20% and particularly resourse and engineering and construction firms

Commodities.
prices will be relatively flat or could head upwards

Unemployment.
6%

 

[ziggy2214]

I reckon
USD parity

How do you see this happening?
Is our $ going up or the US$ coming down?
What about the Euro?

 

[coastymike]

Topcropper

Agreed these sort of things are quite fun. If we really knew where things were heading we would all be retired in Monaco or some other tax haven.

Gold

Trade around $500 USD per ounce towards end of 2009.

General Economy

Deflation

Employment

Public figures between 6-8% here in Australia and possibly around 10-12% in the US.

Share Market

Rally till about February - March and then a major drop.

Property Market

Sydney metropolitan area only. Areas with high percentage of investment properties to experience 10-15% price declines. Top end of the market to experience 15% declines and low end of the market to remain flat.

Aussie Dollar

Trading around 60c in March. Euro to strengthen. Swiss Francs to strength and US to decline.

 

[Sunfish]

Is our $ going up or the US$ coming down?

They are both falling re gold and I'm not the only one who considers gold to be an international currency. In '08 gold rose from A$978 to A$1245 which isn't too shabby at any time but great when winners are hard to find. It had a few $s rise in USD which is still much better than their housing or stock markets.

This year? Both the US$ and A$ will retreat when measured against gold but the A$ will start rising V the US$ again. Four years ago I predicted parity but was surprised that it nearly happened so quickly. I still think we'll get there.

I have now realised I made a big mistake by not studying European economics. Had I done so I might have realised hat they were as badly managed as the Yanks and not been surprised by the global nature of this crash. In my ignorance I thought of it as a US problem which would damage others but the "others" were in deep do do too.

My guess for the year is that the stock market will improve, but not in a straight line, it will still be volatile and stock selection will be critical. Deflation is now fact and must be stopped quickly though. If it gets entrenched we could slide into depression. In a depression all assets lose value, unemployment increases so ability to pay rents decreases. I sincerely hope this doesn't happen.

Happy new year to all.

 

[Ausprop]

nice post Sunfish, agree with it all.

do you not see the deflation being fought with a flood of paper and government projects, thus releasing inflation upon us? I envisage this flood happening very quickly

 

[ILoveProperty]

Hyperstagpression

 

[PrimeCommercial]

How do you see this happening?
Is our $ going up or the US$ coming down?

Aus IR looking like rising up and US flat or gowing down.
Dont know about parity for the Aus dollar but I can see us over our long term equilibrium point of 80cents

 

[willair]

Whats the forecast for Dec 31, 2009..??


.


Unemployment. 8%.




The global credit crisis will gradually be seen as what it really is. An asset devaluation caused by excess of debt and easy credit in the Western world economies, that then spread world wide. We [western nations] were living beyond our means, and doing it on borrowed money. Not enough real production, and too much services and consumption. We are undergoing a deflation of that bubble.

The sub prime, and subsequent debt crisis were not the cause, but only the trigger that set things off. This economic crisis was always going to happen, it just needed a trigger.



All complete and utter speculation. Don't expect a reply from me as I'm walking out the door to go camping for a while.

Topcropper,
Property,from what i see the biggest trap is buying over-valued properties but the question still is what is over-valued, in some inner Brisbane small pockets prices are still on the upward trend..

Shares,after 14 months of the downward slide i still think the next six-nine months will be the same,maybe a few mini "bull"runs to get the sideline punters back in but there is always oppportunties through takeovers and some companies are worth more dead than alive..

Commodities.
As i still hold BHP and several others small start-up miners and Pag so my money is long-term invested,just take one day at a time..

Unemployment,this government will hide the real numbers but my guess would be 10%, the slow down has not hit many area's yet..
imho..willair..

 

[contrary]

TC, I think you are too bullish on property if you think unemployment will peak at 8% (it is currently 4%). My views :

Property.
falls of 10% next year broadly (20% over 1m, 5% on less than 400k properties), basically trending towards illiquidity towards the end of the year. Then another -10% over the next 2 years. I think property prices are going to be the most lagged indicator in this cycle. The sharemarket will lead along with commodity prices. This will have an effect on the economy, and when this causes unemployment to rise, unemployment will have the main flow on effect to property prices. The pipes long, 8-12 month lag so far between falling stocks/commodities and rising unemployment. If the global economy does not turn around until early 2010, Australian property may not bottom for another 2-3 years. Either that or the way the ABS measures it is no longer accurate or comparable with previous time periods.

Shares.
Australian share market : basically flat for the year. Bottoms somewhere around 2500-3000. With all the capital raisings needed next year, not sure there will be much impetus for an upswing.
US : S&P 600 by year end of 2009.

Commodities.
I have to be contrarian about this. The mean oil price since the 1890's has been about $18 USD/barrel in inflation adjusted 2006 prices oil. Adjusted to 2006 prices, the absolute bottom for oil prices this century was $7/barrel in 1930's depression. It plumbed about $15/barrel in late 90's after the Asian crissis. I think this is much worse than the asian crissis so I think oil will be about $15/barrel again. I think we will actually see $10/barrel oil again too, probably by end of 2009.
Base metals I think will reach a price where the average producer will be out of business. That is still down another 30% from where we are.
Grain, food commodities will probably fall much less.

Unemployment : I agree with your estimate of about 8% for Australia.

Interest rates : IMHO likely to go to 0-1% on official rate here. Australia may experience ZIRP as the US and Japan, and soon everywhere else. Maybe 60% of the reduction will be passed onto residential rates from here and 20% on commercial rates. Perhaps less when the banks are in a doodle unless the government can bail them out in some major way.

I think the US will try quantative easing and drive long term rates down in an attempt to stimulate economy further. They will not be able to keep it down as Japan though and rates may be higher by year end. The biggest remaining bubble, the mother of all bubbles is treasuries now. When that explodes, the USD will take a licking.I don't think there will be a a bounce in inflation for a while but I reckon market rates will not stay with ZIRP for more than 12 months.

So I reckon AUD may bottom around 45c. Will then recover as USD implodes. Whether this will happen by end of 2009 or whether it is 2010 or 2011 is anyones guess. So far it has unravelled more quickly than most people expected.

I also think a major bank will be bending over. My pick would be Westpac, as they overpaid for St. George and were a bit overconfident.

 

[contrary]

I like this page :

http://www.institutional-economics.com/index.php/weblog/market-based_predictions_for_2009/

Fiscal Stimulus Doesn’t Work - Ever

Tyler Cowen suggests the historical record argues against the effectiveness of fiscal stimulus:

it is very hard to find examples of successful fiscal stimulus driving an economic recovery. Ever. This should be a sobering fact…

It’s up to the advocates of the trillion dollar expenditure to come up with the convincing examples of a fiscal-led recovery. Right now we’re mostly at “It wasn’t really tried.“ And then a mental retreat back into the notion that surely good public sector project opportunities are out there.

So what you have is the possibility of faith—or lack thereof—that our government will spend this money well.

And that is under “emergency” conditions, with great haste (“use it or lose it”), with a Congress eager to flex its muscle, and with more or less one-party rule.

Another way of looking at this issue is to ask why we would ever need to experience a significant economic downturn if policymakers could effectively smooth the business cycle with fiscal policy.

Meanwhile, Centrebet is offering $1.22 for a local recession by the December quarter 2009. Assuming an 8% bookie’s margin, this implies a recession probability of around 75%. Needless to say, the Treasurer is not happy with betting shops speaking truth to power:

"I think that sort of talk is utterly irresponsible."

 

[kum yin lau]

Hi, Contrary, very detailed, interesting and very brave call.

I think along the same lines except in the degree. Oil to fall further but $10 is a bit of a dream. I think $25-35 to start for the year & thereafter, who knows? Base metals ditto.

AUD to drop to 45cents defies logic. Comparatively speaking, we're measuring AUD vs USD. Your point about the Treasuries bubble is in my opinion, the most important forward thinking projection. USD collapso, other currencies calypso, in the cricketing parlance. So why should AUD first collapse to 45cents?

This is a fun prediction so my thoughts are as useful or as useless as anyone else's. My only problem is what do I do then? I've been more or less sitting on my thumbs for the last 8 months. Reading the forecasts gives me the jitters.

KY

 

[boz]

Good thread,
hope those poster on the forum that because they made 1 forecast right and 9 wrong are going to keep their predictions together
My view:
Property:
generally worldwide economy talks will shift attention off the property market into more current problems like unemployment, gdp growth, companys going bust etc. worldwide also the property market will keep falling but much less then in 2008.
In Australia property will still be at the centre of attention (as seems that is within Australians geenes), Australia will join the rest of the western world and experience downturn in property, here it happen later and we will get out of it later. Sydney will be the city where prices will hold better in % term.

commodity
at the moment they are cheap in gold term (real money), in 2009 oil will not go below 30 to 1 in gold term and by the end of 2009 should stabilise below the 20 to 1 mark (gold at 900 US$ mean oil at 45 US$ barrel)

share market
It will go nowhere in real term (agaist gold or other strong currencys), this is for all the world markets. If the AU$ is stabilising I expect it would test the support of 2700-800 and more likely to go up from that then lower.

Currencys:
inflation will have big chances to come back in currencys like the US$ and AU$ bring commodity prices in US$ term up with that. The US bond bubble will bust and interest rates on the US$ treasury will go back up. the US$ will go down with it against other strong currencys and gold. The AU$ and NZ$ are impredictable but in any case will benefit from bottoming of commoidties later in the year. If the RBA is carefull and don't overdrop the interest rates the AU$ should stay stable.

unemployment
it will not peak in 2009 but more likely in 2010 in the range of 8 to 11%

 

[Peter 14.7]

I agree a fair bit with TC especially

The global credit crisis will gradually be seen as what it really is. An asset devaluation caused by excess of debt and easy credit in the Western world economies, that then spread world wide. We [western nations] were living beyond our means, and doing it on borrowed money. Not enough real production, and too much services and consumption. We are undergoing a deflation of that bubble.

Here is my call:

Property.
Expensive capital city property fall another 20%, rents down only 10% as locals stay local and even rent their own home on the quiet%
FHO Suburbs prices rise 10%, rents flat
Affordable End CBD Apartments rise 10%, rents rise 10%
Regional property, fall another 10%, rents flat.
Mining Towns to fall by 50%, rents collapse

Shares.
Australian share market up flat till mid year, then gradual rise.
No comment, idea OS.

Commodities.
Oil, $80 per barrel.
Others, recover 20% up.
No comment Gold

Unemployment. 7.5%. Will not be as bad as 10%. Simply not enough of us to do the jobs and still a skills shortage.

Rates
4.8% variable by Easter

Recovery Signsin Media
Middle 2009 the media will go from Negative "Its bad and getting worst"
to Positve, "some signs of good news"


Please please free to post in my poll as well. Will you buy an IP in 2009?

http://www.somersoft.com/forums/showthread.php?p=497141&posted=1#post497141

Peter

 

[Aaron Sice]

i dont care which way it goes.

i've got my blinkers on, remember. all i'm looking for is direction - stagnant markets worry me.

i have enough back up plans for the real "5h1thitsfan" scenario that i just wish it would bl00dy well get there.

i think you all might be very surprised at my predictions of a substantial recovery by 2010. this current GFC is nothing like the early 1900s, 1930s, 1960s or 1980s. there have been crashes and dooms and glooms and wars for this whole century and yet people still lived through them and made money through them.

what did they do that i am not doing? those are the questions i'm trying to find answers to.