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Monday, December 31, 2012

Predictions 2012 recap

1 year ago I posted predictions for 2012, lets see how I did.  Text in Italic is original article, quoted.

2012 - 2 miss, 1 partial, 7 hit
2011 - 2 miss, 2 partial, 6 hit
2010 - 1 miss, 3 partial, 4 hit
2009 - 7 miss, 8 partial, 5 hit  (my first year, some crazy predictions!)

2012 predictions
1) The market will end LOWER on Dec 31st 2012 than Jan 1st 2012.  Last year I waffled and said couldn't tell, and the market did end about flat.  This year I am not going to hazard how low the market goes.  It could move higher before lower.  But with the election over by November, pretty much the hype of the next president will be over, and the market can take a nice dive, like it did in 2008.
Complete and utter miss, did not end lower.

2) Commodity prices will bottom in 2012 - there will be a pattern of a low hit in 2012, with the CRB index moving up from that low set in 2012 at the end of 2012.  This will be the setup for a hell of a 2013 that no one will forget.  This index represents commodity prices in USD terms.  (This includes Gold, Oil, and food.) This will be key setup for the inflation issues ahead.
A hit for 2012, we had a distinct CRB bottom mid 2012.  The only question is follow through in 2013 or not. This could be a fake hit, if CRB breaks into new lows in the years ahead.  See chart at bottom on CRB.

3) The worst of China's financial crisis will come to pass in 2012.  A new regime will take over, and plans for creating the worlds largest consumer nation will be center stage.  China's stock markets will bottom in 2012.  In effect, China will throw down the gauntlet at replacing the USA as world economic driver.  The transition will take years.  This setup by China will move from the corners of blogs to mainstream media.  Expect China to take shots at USA like trade tariffs etc.  It will be all positioning for them to take the upper hand in the world arena.  The issue won't be why the tariff is justified or not.  The issue will be China can do it and the USA can't respond in kind.  It will in effect be a test.

A hit.  China regime change happened in November. I am sure everyone is aware of the details, since the largest country on the planet changed government once every decade....    Chinese stock market hit a low first week in December not seen since 2008, and has been on a tear upward since.  Up 10% in less than a month.  There have been multiple contention points with China in 2012 on trade and military.  China is positioning to take over Japanese controlled islands, as it continues to breach Japanese territories on water and air. A tariff war has not started between China and USA, although some tariffs around solar and wind power are in progress.  The New Leadership is trying to reform the corruption, which is required to take over the US as world leader.   Only miss is mainstream media ignores china in USA.

4) The Euro will NOT be the same as it entered 2012.  The nations bankrupt will be either kicked out of the euro, or a new two-tier model created, or a new Euro model that allows printing to finance debt emerges.  The facade of all nations must adhere to fiscal responsibility will in effect be gone.  The nations that need to print, can, either through the euro or on their own.
Utter Miss.  Euro is kicking the can, and nothing has changed, except appeasement and perpetual financial turmoil.

5) US, and Europe will be declared in a recession.  The media has hinted, but this hasn't come to pass.  Although this may be a "gimme" on my part, it is still an important event for the 2013 lineup.
Partial hit.  The recession isn't declared, but its there.  US is in a recession since July, and Europe same.

6) US 30 year bond rates will NOT break out of the channel in effect since 1986.  This is critical, for if we do break out of this, chances are most of my other predictions will be wrong.
A hit!  Another year of 30 year bond rate decline since 1986. What won't go up, must go down...until zero is hit.

7) US dollar will NOT break below the low in 2011 until after August of 2012 (or may not at all in 2012).  With the election, there will be enough political spin to keep the dollar from crashing until close to the election.  This is related to, but not tied to the previous item, Euro, China, and the market movements.
Hit! US dollar has spent entire 2012 above the low in 2011.

8) State and Town bonds will continue to deterioration as high quality choices for investments.  I am pulling back from my 2011 prediction of a significant shift.  Instead for 2012, predict more issues, more bankruptcies, and some interesting court rulings.
Hit, if I stick to the bold line above. Towns are winning right to go bankrupt, but no avalanche yet.  Also all States operate solvent, even if not truly solvent.  However, no state bankruptcies.

9) Since this is an election year, there will be a few TOKEN prosecutions around financial wrongdoing, but overall, we won't see the law enforced like we did back in the Savings and Loan crisis.  Lack of law enforcement continuing is crucial for the 2013 crisis setup.
Hit, really no major push to prosecute for trillions in fraud.

10) The end of the world will not happen, China will not declare WW3, and mass riots in USA will not happen.  In a nut shell, 2012 won't be chaos erupting, but 2012 will be the layup for 2013+ for issues heating up.  My 2013 predictions will make all previous years look tame. :)
Hit, Chaos is at bay, an easy one :)

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