Category Archives: Market outlook

Explaining how Reaganomics failed to act against the effects of rate hikes

Tax cuts, investment, the strong dollar and the twin deficits. For economists, Reaganomics is a very unique economic experiment. Looking at the GDP and the stock market in 1980s, it seems that Reaganomics was successful, but it is not well understood what exactly drove the economy. This article aims to explain why Reaganomics failed in the first few years and led to the later success, and what the cause was.

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Hedge fund managers on President Trump’s economic policies

After Donald Trump won the presidential election 2016, the financial markets have reacted very dynamically, but investors also do not seem very determined about what the political shift would mean to the global markets.

Yet they would not be to blame, especially when even the world’s greatest hedge fund managers have diversified, different views. Some foresee rapid growth, whilst others still remain cautious. We introduce both in this article.

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Fed rate hikes would seriously hurt the US economy, as 3Q GDP shows

The US GDP data for the third quarter of 2016 is what investors, including us, have been waiting for, because it is much more relevant for future rate hikes than the job data, which the Fed claims to be caring about.

The job data has already been very strong for a long time, and thus if the Fed’s preoccupation is indeed the labour market, it must have already raised rates this year, which is not the case.

So the Fed, or at least Janet Yellen, is caring about the slowdown of the US GDP growth, and the new data showed that the slowdown is indeed ongoing, and rate hakes, if any, would put an end to the already weak growth.

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How you could have predicted the financial crisis in 2008

It is not always easy to predict a collapse of a financial bubble, but there often is something that indicates it in advance.

In the case of the subprime mortgage crisis in 2008, some famed fund managers such as George Soros or John Paulson knew it could be as serious as it eventually happened to be. This article explains the economic situations during the crisis and shows the statistics that preceded to imply the timing of the collapse of the stock markets.

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The dollar to fall as the GDP growth in 2Q radically weakens, secular stagnation looms

The US Bureau of Economic Analysis published the GDP data for the second quarter of 2016, and the real GDP growth turned out to be 1.23% (year-on-year), slowing down from 1.57% in the previous quarter. The US economy has been significantly slowing down in 2016 as we predicted last year, when it was growing more than 2%.

However, the published data this time suggests more detailed interpretation is necessary to predict the upcoming future of the US economy.

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2016 1Q Japan’s GDP: the economy grew negatively due to the market turmoil

In the first quarter of 2016, Japan’s real GDP grew -0.05% (year-on-year), slowing down from 0.85% in the previous quarter. This is the first time since 2013 for Japan’s economy to grow negatively, excluding the four quarters after the consumption tax hike.

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George Soros buys gold and a gold miner, short sells S&P 500

The Form 13F for the first quarter of 2016 has been published, and the portfolios of hedge fund managers revealed.

In the disclosure, Mr George Soros’s Soros Fund Management appeared to have started positions in gold and a gold miner and also to have continued short selling of US stocks as he claimed in Davos in January 2016.

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2016 US REIT forecast: the Fed’s rate hikes, rate cuts and quantitative easing

Since the first rate hike in Dec 2015, the Fed has been in the course of normalizing interest rates. Although we as well as many of the famed hedge fund managers expect the central bank will eventually cease raising rates and resume easing, it is still reasonable to assume one or two rate hikes in 2016 are still possible.

Even if it happens, rate cuts will follow it anyway, but it is important for investors to consider how to trade on the temporary monetary tightening. As federal funds rates futures expect only one rate hike in 2016, two rate hikes will be a surprise if it happens.

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Who was right about the US stocks in early 2016?: George Soros, Ray Dalio and Bill Gross

S&P 500 has recovered from the plunge in the beginning of 2016. Many famed hedge fund managers published their own view on the stock market, and who has been right so far? We would like to review the predictions by great investors such as George Soros, Ray Dalio and Bill Gross.

2016-4-20-s-and-p-500-chart

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The US inflation forecast 2016: the graph edges higher, implying stagflation

In 2016, the Fed is trying to raise interest rates. The US economy is actually starting to decelerate, but the Core CPI (excluding food and enegies) is edging higher. If this uptrend is long-term, the Fed might be forced to rush for rate hikes undesirably.

Will that happen? Is the US economy going into stagnation? In this article we argue the outlook of inflation in the US and its influence on rate hikes, the stock markets and the gold price.

Continue reading The US inflation forecast 2016: the graph edges higher, implying stagflation