Monday, January 16, 2012

Predictions for 2012

OK, yes, these are a couple of weeks late. Never mind.

  1. Motor Racing: Button will win the F1 driver's championship; Audi will win Le Mans
  2. Iran: Shots will be fired, UN sanctions, no invasion in 2012
  3. Eurozone: Greece defaults, EFSF and FU do nothing, Euro currency limps on (>1.30/£, <$1.20)
  4. Scotland: No referendum date announced during 2012
  5. Olympics: More GB medals than at Beijing 2008, but fewer golds
  6. Terrorism: No attack on the Olympics, nor in the UK mainland
  7. Markets: Gold will top $1900/oz, FTSE >6000 and S&P500 >1350 during the year
  8. US politics: Romney will get the GOP nomination and will narrowly beat Obama
  9. UK politics: Ed Miliband will survive (at least) through the Labour party conference, the coalition will last into 2013
  10. Mayan calendar: the world won't end in 2012

- Mystic KoW

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Wednesday, December 28, 2011

2011 predictions

Well, it's been a year since I made some predictions - a year in which I seem to have posted almost nothing. Oops. Let's see how the predictions went, though...

Inflation will remain high, forcing an increase in the BoE base rate by the summer
RPI has been above 5% all year, but the BoE is deliberately allowing inflation in spite of its obligations. Half a point? (0.5/10)

Property prices will continue their recent slide, exacerbated by the interest rate rise, and will finish down about 10% on the year
Nope. Up 1.6% YoY as of November, so a slight fall in real terms but no rate rise meant no crash. (0.5/10)

F1 won't be won by a German this year - I'm going to say McLaren for the double. Probably Hamilton, but it depends how well the new tyres suit Button.
Hahaha! Vettel won damn near every race, in one of the most lop-sided competitions for many years. It was still a damn entertaining season, though, once you ignore the car at the front. (0.5/10)

Audi will win 24 Hours of Le Mans again, despite a close fight with Peugeot, and Drayson Racing will be classified finishers.
Drayson Racing didn't enter for Le Mans, but Audi most definitely won - with Peugeot picking up second through fourth after an incredibly close race which saw two of the Audis crash out. (1.5/10)

Sterling will rise slightly against the Dollar - $1.60 - and fall slightly against the Yen - 115. I'm going to predict a rise against the Euro, though not sure how much maybe 1.20-1.30?
Today, £1 is worth $1.5661 (low in September of $1.53, high in May of $1.66), €1.1983 (low €1.2045, high €1.1065) and ¥121.7295 (low ¥116.985, high ¥139.62). So, we have hit €1.20 and $1.60 during the year, but it's been very volatile - half a point? (2/10)

Oil prices will fluctuate, but petrol prices will ignore this and rise to £1.50/litre for no adequately explained reason.
We've reached £1.32/litre for Unleaded, but I'm going to call this one a failure. (2/10)

Gold will trade above $1600/oz, but most of the volatility will be in silver and/or platinum.
Gold is only just below $1600/oz again - and it hit $1900/oz. Silver has been a little more volatile, but it's been an exceptionally volatile year for all metals. (3/10)

GDP growth will remain anaemic, maybe 1-2% over the entire year. The FTSE will remain above 5000 as a result.
Half a percent in Q1/Q3, flat in Q2 - even without the Q4 figures, I'd say that's a definite hit. Particularly since this time last year we were going to get >3% growth in 2011. The FTSE touched 5000 a couple of times, but has basically stayed above that psychological point for the entire year. (4/10)

There will not be a General Election in 2011. The coalition may not hold for the entire year, but I think it will last long enough.
It's too late now to call a GE before 2012, so even if the coalition falls this week, this one was bang-on. (5/10)

There will not be a significant Islamist terrorist attack in the UK, the US, or on a transatlantic flight. Let's define "significant" as "kills one or more people", none of this "has the Houses of Parliament on a list of targets" nonsense.
None. A couple of lone wolf nutters in Tucson, AZ and Norway, the Irish are back, and plenty of trouble from al-Qaeda et al in the Middle East, but nothing to worry about here. How's that Terror Alert Level doing? (6/10)

I might have been generous for a couple of those, but I'm fairly impressed by that strike rate. Shall have to make the 2012 predictions more specific and objectively measurable...

- Mystic KoW

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Monday, January 03, 2011

Predictions for 2011

OK, well, 30% wasn't too bad, so I think I should push my luck...

  1. Inflation will remain high, forcing an increase in the BoE base rate by the summer
  2. Property prices will continue their recent slide, exacerbated by the interest rate rise, and will finish down about 10% on the year
  3. F1 won't be won by a German this year - I'm going to say McLaren for the double. Probably Hamilton, but it depends how well the new tyres suit Button.
  4. Audi will win 24 Hours of Le Mans again, despite a close fight with Peugeot, and Drayson Racing will be classified finishers.
  5. Sterling will rise slightly against the Dollar - $1.60 - and fall slightly against the Yen - 115. I'm going to predict a rise against the Euro, though not sure how much maybe 1.20-1.30?
  6. Oil prices will fluctuate, but petrol prices will ignore this and rise to £1.50/litre for no adequately explained reason.
  7. Gold will trade above $1600/oz, but most of the volatility will be in silver and/or platinum.
  8. GDP growth will remain anaemic, maybe 1-2% over the entire year. The FTSE will remain above 5000 as a result.
  9. There will not be a General Election in 2011. The coalition may not hold for the entire year, but I think it will last long enough.
  10. There will not be a significant Islamist terrorist attack in the UK, the US, or on a transatlantic flight. Let's define "significant" as "kills one or more people", none of this "has the Houses of Parliament on a list of targets" nonsense.

- Mystic KoW

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2010 Predictions

Back here I made some predictions for 2010. Let's see how bad they turned out to be...


Inflation will reach double digits
Um... nope. About 5.5% RPI, 3.5% CPI. High, but not double-digit. (0/1)


Conservative victory in the General Election, by >30 seats
Nope. 20 short, but the coalition is 37 over the threshold. (0/2)


Britain will lose her AAA credit rating...
... but will regain it by the end of the year after massive cuts in public expenditure
Somewhat. We didn't formally lose the credit rating, but were marked as a negative outlook and the bond markets were pricing us as de-facto AA. We did need, and get, some cuts. (0.5/4)


The FTSE100 will drop below 4000 before rebounding
Nope. 52-week range is 4790-6021.5. (0.5/5)


There won't be a new Labour leader in 2010, Brown will cling on and smear his rivals as the party implodes
Nope. We now have the Work Experience Kid and Brown vanished like Scotch Mist. (0.5/6)


Sterling will drop below parity with the Euro, and below 120 Yen, but will stay around $1.50
52-week range against the Euro is 1.0966 - 1.2339, so, no, didn't expect the collapse in the Eurozone.
52-week range against the Yen is 125.5190 - 150.7188... damn, so close, especially as it's only 126 now.
52-week range against the Dollar is 1.4227 - 1.6459 (mean = 1.53), so I'm happy with that one. (1/7)


Global Cooling will continue, more neutral/negative results will come out, as will a few more scandals, Copenhagen will be swept under the carpet and most politicians will be claiming by the end of the year that they were always skeptical
Coldest December in decades, unseasonably cold in Cancun for COP16 (and generally only a ministerial presence rather than leaders), a paper claiming no link between CO2 and temperatures. I'm going to say that's a win. (2/8)


Sebastian Vettel to win the F1 world championship - he'll be the fastest German on the grid, certainly
Boom! Right on the money: Vettel won the championship, beating six other Germans in the process. (3/9)


VAT may or may not increase, but basic rate income tax will hit 25% as a temporary measure
Nope. The coalition wouldn't stand it. (3/10)


So, 30% right there. I'd be lying if I said I hadn't expected more, but I'll take it.
 
- Mystic KoW

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Saturday, July 31, 2010

"Stick a Trident in it, this country is done"

Well, the British Summer has been and gone, so that's probably my last chance to use a barbecue reference. Work - new job - has been busy, so apologies for the lack of updates.

This last week, like so many others, has been bad news for defence. Nick Clegg announced four more deaths at PMQs on Wednesday, RUSI suggested cutting back from four Boomers to three and so dropping us to a fleet too small (9 boats) to sustain a submarine-building industry, and then on Friday morning it came out that George Osborne was insisting that Trident funding comes out of the MoD main budget.

The BBC were quick to jump on the story, questioning whether this will mean cuts to carriers or to JSF procurement, and they broadly supported Osborne's statement that "All budgets have pressure. I don't think there's anything particularly unique about the Ministry of Defence.". Really, George?

How many other departments have their staff being killed on a daily basis?

What's that? There are no IEDs in schools? No snipers in Whitehall? No insurgents ambushing doctors in hospital A&E departments? No landmines in police stations?

Defence is unique in that if you do it right, British citizens will die; and if you do it wrong, you won't have a country left to run.

That's not so say things are done well in the MoD, they're not. The procurement process is hugely inefficient and not fit-for-purpose, the tens of thousands of pen-pushers make the ministry top-heavy, and the budgets are too low in any case (2% of GDP is lower than other Western powers and a peace-time fantasy).

I had hoped that ousting infamous defence hater Gordon Brown would mean a change in the way things were done, even though I saw little evidence that they would be. Now it's clear that the Liberal Conservatives are no better. They live in the same centre-left puddle of "nice" middle-class Progressive soi-disant liberalism as New Labour and focus on the same populist demagoguery. Nobody values defence, because "the world is safe"; we have a few token wars thousands of miles away, but no "real threats". We have the luxury of being able to worry about how much aid we give away and what our carbon footprints are and how our eating habits will affect long-term healthcare provision. And so defence spending is always and ever a target for cuts to buy votes from the client state. A few people will wring their hands when Land Rovers are blown up and helicopters shot down, but then go right on claiming their "entitlement" to Tax Credits and congratulating themselves for being "a shrewd investor" by buying a house which is now bubble-valued at significantly more than they paid and demanding action on their "rights" not to have other people smoke or drink or eat unhealthy food.

So, Defence remains under attack from the Treasury, remains incompetent at procurement and remains right at the bottom of the ministerial pile. Useful idiots like Douglas Carswell and Lewis Page continue to attack the "cozy" (adversarial) and "protectionist" (largest open defence market in the world) industrial policy, encouraging us to take - with defence of the realm! - the sort of counterparty risks that the banks are being banned from taking. Liam Fox is a good man, but it now seems clear that he's on a hiding to nothing - rearranging deckchairs on the Titanic, in effect.

I left the defence industry when the bank bailout showed that some industries were more equal than others, and that defence wasn't something anyone actually cared about. I guess you could call it a Falling Down moment. I find it hard to express my feelings more succinctly than Michael Douglas' character:
I helped build missiles. I helped protect this country. You should be rewarded for that. But instead they give it to the plastic surgeons.
I wasn't the first to leave the industry on that basis and, from the sounds of it, I won't be the last.

It's going to take a while. Decades, probably. But then the UK won't have a defence industry (or any manufacturing at all, really), won't have a nuclear deterrent (or the seat on the UN Security Council that it buys) and so won't have any influence in geopolitics. So not much point in having a military, really - Belgium and Ireland have pretty much gone that way already. The UK will probably fragment along nationalist lines and will almost certainly be swallowed up into a giant Federal Europe. Citizens will be squeezed for ever-higher taxes to pay for the immense bureaucracy needed to keep the gravy train rolling, the make-work jobs and the "entitlements" of the populace and, just like the USSR, the continent-wide centrally-planned economy will collapse under its own weight. A gigantic public sector will pretend to work and the government will pretend to pay them, all the while sliding into oblivion.

Count me out.

Not today. Not tomorrow. It takes time to build a new career and a new life from scratch, but that's what I'm now working on. Where will I go? Not sure yet. The US or Japan are reasonably safe options; the BRICKs offer lots of opportunities.

- KoW

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Tuesday, April 20, 2010

Inflation

Holy shit, it's been a month since I last posted. How did that happen?

So, today's news is that inflation has jumped up again: 3.4% CPI (up from 3% last month), 4.4% RPI (up from 3.7%). My prediction at New Year's, of double-digit inflation, seems possible.

In this evening's Evening Standard, James Hughes of Black Swan Capital wealth management is quoted as saying
This sharp increase in UK inflation is possibly just the start of an inevitable and unstoppable slide towards double-digit inflation and interest rates within the next few years

Good name for a company, Black Swan. Presumably taken from Taleb's book. Still, we'll have to wait and see - I only win my pint if RPI is over 10% by mid November.

- KoW

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Tuesday, March 02, 2010

What a hung parliament really means

Today's Metro (p5) has an article titled 'Hung vote' polls spark pound panic - which is only slightly different to the online version.

The pound has fallen from $1.60 to $1.48 in just a month. Two years ago, it was trading at $2.00. The stack of $20 bills on my desk, bought a little under a year ago, is now worth 12% more than I paid for them - even with the foreign ATM fees and the bid-offer spread, that's a healthy profit.

The falls would have been even worse if it weren't for the problems facing the Dollar (Obama's spending, particularly the healthcare issue) and the Euro (Greece...) - the Yen is now trading against Sterling at a rate I'd have expected for Dollars five years ago: 133¥ per!


That is the cost of Labour's fiscal policies and of quantitiative easing. We've lost 20-30% of the value of our money and Sterling-denominated assets.

We're all 20-30% poorer than we were a couple of years ago.

And the markets know that, and fear it continuing. A hung parliament with Labour as largest party is the worst of all possible outcomes: no power to make changes, and no desire to, either. Unless there is a clear Tory victory, we're about to become a third-world country. Yes, it is that bad. Guido has already noted that as has the FT. The bond markets are already pricing us as AA, even without a formal downgrade, and uncertainty could easily drive that to A+ or below. If the government can't borrow £180bn/year, it either has to slash and burn spending by something like 20-30%, or devalue Sterling by printing yet more money: we could have lost half of our wealth in just three years.

I predicted double-digit inflation at the start of the year (well, actually in November 2007), and the last month has added upwards of 7 percentage points to the cost of imported goods. Green beans from Kenya, Egyptian potatoes, Korean plasma/LCD TVs, German or Japanese cars, oil, gas, Brazilian "British" beef, all likely to be several percent more expensive this year than last. Prices are therefore going to be growing a lot faster than the feeble GDP recovery we're seeing: the dreaded stagflation of the 1970s.

The current war on bankers could well destroy 30% of GDP - so, around 60% of private-sector production, given our bloated public-sector - which would be crippling. As much as people might hate the banks, we simply cannot afford to lose them. The riots in Greece could, and probably would, happen here if the necessary public-sector cuts were forced (by market action) to be taken quickly - 2m jobs lost overnight, if a debt auction is refused.

Brown must go, it's that simple.

- KoW

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Tuesday, December 29, 2009

Predictions for 2010

Inspired by Iain Dale's predictions, here are mine:
  1. Inflation will reach double digits
  2. Conservative victory in the General Election, by >30 seats
  3. Britain will lose her AAA credit rating...
  4. ... but will regain it by the end of the year after massive cuts in public expenditure
  5. The FTSE100 will drop below 4000 before rebounding
  6. There won't be a new Labour leader in 2010, Brown will cling on and smear his rivals as the party implodes
  7. Sterling will drop below parity with the Euro, and below 120 Yen, but will stay around $1.50
  8. Global Cooling will continue, more neutral/negative results will come out, as will a few more scandals, Copenhagen will be swept under the carpet and most politicians will be claiming by the end of the year that they were always skeptical
  9. Sebastian Vettel to win the F1 world championship - he'll be the fastest German on the grid, certainly
  10. VAT may or may not increase, but basic rate income tax will hit 25% as a temporary measure
- Mystic KoW

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