2013 Global Economic Forecast

US Economy

This is  the year the US will dip into recession and start a bear year cyle that will affect  the  global economy from its grip of recovery. Based on my study of cycles -this is part of the 5 year cycle bull rally cycle that started last 2009 rally  which I expected to end by this year.  This inflationary   technical recession/correction with interest rates maintained to zero will continue only  for 16 months and stabilize by November of 2014.  The rally from 2012 may continue up to march or April which is a better scenario depending on how  the Market  will be sensitive to the issue in Washington about the US debt ceiling and budget deficit on Feb and March; this will send shivers not only in the US but across the globe. Political debate and wrangling will only make the situation worst together with the unending blame game between the two parties will continue as the US economy falls victim to its own demise.

However; there is a big "IF" between the period of Feb  and March that law makers will have a  consensus move to raise the US debt ceiling  on March and see hopes for a fix for the US fiscal problem as the short term solution.  If that happens;  we will see a 5-month  correction in the US stock market visiting the 2012 lows , this will start from  May till August's bottom of this year. And from this bottom will be followed by a strong  Rally in the stock market that will drive the DOW above the 16,000  -17,000  by the year 2017  ; and this  rally  will not only in the US but across the globe .  If my Elliott wave count is correct; this rally is the wave-3 rally and also one of the most powerful and volatile  rally than the previous rally of 2010, and 2012 where huge swings are most common and all time highs are being made out for the stock market.  This is the most bullish of all the rally where euphoria is at its peak and where the whole world is made to beleive that the crisis is over and that we are on the path of global recovery.
edited: last Feb 13,2013

If weather the US will make a temporary solution  or another QE with a different name  to delay its predicament, will not change the outcome, because first it is a cycle, and everything consciously or unconsciously we react to the cycle. It is the law and the  natural cycle of experience.

Diagram shown above is the US financial cycle compilled by W.D Gann last 1903

European Union and China

The European union has been experiencing a depression since 2012 and will continue to do so,  however we might see a bit of optimism and a rally in the stock market as well an appreciation of its currency together with Chinese economy starting  by the second quarter of the year .   The Chinese Economy will remain as the engine of growth of the world and its economy to continue to grow. Although central banks will  try to stabilize the appreciation of the yuan; but will fail in the end.  This will also drive the demand for precious metals and ore which will drive the prices of precious metals and commodities to  surge.

By the 3rd quarter of the year , when the stock market panic triggered by the US stock market, the European group of nations will not escape from this turmoil and reached the shores of europe once again and global economy in general.  This will create a surge in average  bond prices to sky rocket all over Europe and Asia  that may cause a potential bubble and may be followed by a  currency war between nations as protectionism will start to become eminent and international trade to be affected.

Economic Bright spot

On the other side of the world, there are countries who would most likely be least affected and the region most resilient.  This is the South east asian countries (ASEAN) will become a bright spot where growth is continues  and most resilient .  Countries namely, Indonesia India, Vietnam, Philippines, Thailand, Singapore and Cambodia,Turkey and Myanmar with their sound fundamentals, debt to GDP ratios less than 70% and trong domestic consumer base economy will hold the economy afloat .  Also  growth will still continue on other Asian countries like China, India, Korea, Russia and Mongolia.as well as   other countries like Mexico, Brazil, Ireland, New Zealand and Australia.

edited: last Feb 2,2013

Gold forecast

Gold will average $1,720 an ounce this year and $1,600 in 2014, Tom Kendall at Credit Suisse in London expects $1,740 and $1,720 and Jochen Hitzfeld of UniCredit in Munich predicts $1,700 and $1,800. Bullion rose more than sixfold since the bull market began in 2001.

All three forecast record average prices this year because central-bank stimulus will sustain buying as a hedge against inflation and currency devaluation. Danske and Credit Suisse predict lower prices in 2014 as economic growth curbs demand for the metal as a protector of wealth while UniCredit says record- low interest rates will maintain gold’s allure.

Gold rally is due to three main reasons

1.)The increased demand for- mining projects and  the resilient chinese economic recovery that will drive demand in precious metals and gold

2.) Large Middle class around the world especially in china and India ar buying either in spot gold or ETF for gold  ; due to the loss in confidence in the monitary system ,hedge against inflation and to the declining dollar.

3.) Central Banks around the world buying gold funds ETF and physical gold bullion to back their currency

( a just in case scenario) if the dollar collapse.

Philippine 2013  Economic technical Outlook

Phillippine Economy will be generally Very Bullish for 2013 especially the second part of the year having a target GDP of  7.2 %,The rally from 2012 may continue up to March or April depending on how  the Market  will be sensitive to the issue in Washington about the US debt ceiling but it will just have to correct on the first quarter starting   starting April or May( US Debt ceiling issue)   and bottom by the end of May 21 after showing a double  bottom and a higher bottom by June  till July before the general market heads north caused by the post election rally. .There will be a 5 month rally in the stock market from  July- Dec .This will be one of the strongest rally in the stock Market , but this will be not be until June this year that technical Indicators will reflects buy signals before the smart money on the sidelines will enter and  volume to increase significantly . Also, by that time, a recovery in the Chinese market  will drive the demand for  ,precious metals: copper, nickel, gold, silver as well as the continued rally in commodities.
     But the high of January or Feb 2013 at the 6,200-6,300 level will not be brokern  not until June or July of this year, as new highs will be made in the stock market price for the PSE index  targeting the 9,000- 9500 mark by the year end when the Market will held ground with its resilency , strong corporate profits and fundamentals and may stay to pick up again by Oct and Nov of this year for the Market rally to continue further making new highs.

edited: last Feb 2,2013

Recommended Stock groups:

The First half of the year will be good for Media ( priced -in already)/ Advertising, 

Technology/ IT companies , Industrials and Telecoms
( Jan - Feb) Technology/ IT companies , Industrials and Telecom

(Feb - March )Oil stocks ,Banks and Transportation services and  Holdings

                Financials and Banking stocks - due to influx of foreign funds and mergers

                and Holding companies.

(Feb – May)   Energy and  Power corporations, Utilities,Gaming

(May - Oct ) -  Consumer Goods, Malls, Food& Beverages

Second half  will be generally good for the Food and service sector,Industrials and property.

 (April - July - Aug )= Properties,  Retail  ,Food

(Sept - Dec  )Gaming and Materials

(Sept – May)  Industrials

(July – Oct)   - Gold and Metals or Mining Companies ( especially those mining gold)

(Oct- Dec)  - Consumer Discretion and Information technology

I intentionally  hide my mathematical model for the PSEi index in this post because I am hesitant  and afraid that the model can be exploited for profit and may cause over volatility  or  lost motion on the natural market price  movement since the Index can now be directly traded in the stock exchange.

AS always  have a plan and  Trade cautiously,

CAVEAT!

-PinoyGtrader

DISCLAIMER

This projections are just the author's  Opinion /approximations and projections of future price movement only !!! and it does not guarantee profit /reflect the actual market price movements in the future.This are just  the author's speculative representations and solely for informative purposes only. Always trade at your own risk.