S'pore home prices still falling

[HitandRun]

I agree, the US interest rate hike, will be slow and mild, hardly quality for a "shock".

What do you think? Anyone to add into the list?  

CF san

The general assumption in this thread appears to be that the US can and will hike rates to say 3% or even 5%? {This appears to be a repeat of last year's thinking}

Doesn't everybody know that it has been the longest and weakest recovery period since WWII?

What if another recession hits before that? Why is Yellen (and associated academics) talking about negative interest rates? 

My crystal ball (faulty no doubt) says that the odds of a US recession next year gotta be as good as continuous weak growth. I would put the odds of the US having strong economic growth to be rather remote.

[BlueKelah]

I just don't see a Trump presidency, not even close vote. As for China hard landing, i don't see it ripple through the world economy and cause a collapse except for those resource countries that rely on China. Look at Japan. They have so many lost decades already and still economy has not collapse.Why? The key is if you don't have to borrow from outsiders and they can pull the rug from under you. China has deep pockets just like Japan has borrowed money from their citizens. In the meantime China is turning to domestic sectors to prop up the economy. Look at how may billions is Wanda group investing in local theme parks.

When China hard landing comes you will get the chance to see how it ripples.Their GDP growth slowdown to 6.5% is already having big effect on quite a few commodities. 

Last year when their stock market crashed and when they started to devalue their yuan and the effects on global markets is already a good example, and these were just containable events.. 


BREXIT just affects trade in Europe and UK economy not that large to have much ripples worldwide. EU is already crappy economy kept sideways by constant QE. BREXIT could just be a trigger like greece for contagion effect.

USA is same situation lah, so much talk about raise interest rate by .25%. But their unemployment numbers if you look at the details is not that impressive. Trump win or not we will have to see. Everyone was so confident about the BREXIT result being a NO until it became a YES so no point speculating.

[Porkbelly]

"... this time its different.."

I doubt that there will be any prolonged,dramatic or sudden falls in stock or property prices.
As Jacmar wrote: "... many levers ".. I agree with that.

Singapore has not experienced any dramatic falls since the 1st Gulf war and SARS. both of which are events that do really shock any system. I doubt very much too that any terror event here will be prolonged and any effect to the property & stock markets is going to be a non-event.

Unless its prolonged.

Though there is a section of people that have lost their jobs..  a mass event is very unlikely. ( because of the levers )

At this point, the real economy has yet to manifest any signs from the negative numbers that has been spewing out from all sources.

Life is honky dory.
There is an abundance of fat.
It will take a long, very prolonged negative event to reduce fat.
And its not going to happen as the interest rates will remain very, very low.

US hikes rates?...
not likely.

Conclusion?... Zombie state... neither forwards, neither backwards.

[TTTI]

Yes global economy is softening but don't see a major shock coming; not even the incoming interest rate increase which will be slow and mild in next few yrs. I think the only one to look out for is BREXIT if the Europeans are stupid enough to go on a feeding frenzy and shoot their own foot.

The obvious potential big external shocks are, IMO

- A hard Brexit opted in UK
- A "Trump" president in US
- A "hard-landing" in China

I agree, the US interest rate hike, will be slow and mild, hardly quality for a "shock".

What do you think? Anyone to add into the list?  

I'll add another black swan event:

War/Terrorism

Between.... I dunno. Seems like everyone has an axe to grind with everyone these days!

[BlueKelah]

Seller incurs $111,000 loss despite buying near bottom of market

[Properties sold near the bottom of the market are not necessarily a value buy. A 969 sq ft apartment at Icon, a residential project located a short walk from the Tanjong Pagar MRT station, was recently sold at a loss of $111,000. The seller had purchased the unit in November 2009, shortly after the market picked up from the Lehman Brothers crisis].

[The biggest loss in the week of Nov 8 to 15 amounted to $828,000. It accrued to a 1,227 sq ft unit in Marina Bay Residences. The seller had purchased the unit in August 2010 in a sub-sale at $3.83 million, or $3,120 psf.]

[specuvestor]

Yes global economy is softening but don't see a major shock coming; not even the incoming interest rate increase which will be slow and mild in next few yrs. I think the only one to look out for is BREXIT if the Europeans are stupid enough to go on a feeding frenzy and shoot their own foot.

The obvious potential big external shocks are, IMO

- A hard Brexit opted in UK
- A "Trump" president in US
- A "hard-landing" in China

I agree, the US interest rate hike, will be slow and mild, hardly quality for a "shock".

What do you think? Anyone to add into the list?  

I'll add another black swan event:

War/Terrorism

Between.... I dunno. Seems like everyone has an axe to grind with everyone these days!

It's actually quite eerie that 2 of the unthinkable happened Will China also hard land?

Personally I don't see a sharp US i/r rate increase but at most once a year for next 4 years, and I think USD strength will be reversed but yield curve is probably right on ie I think negative US interest rate will continue next 4 years.

Watch Singapore the canary in the coal mine. I still think 2017 is a recession year

[BlueKelah]

Yes global economy is softening but don't see a major shock coming; not even the incoming interest rate increase which will be slow and mild in next few yrs. I think the only one to look out for is BREXIT if the Europeans are stupid enough to go on a feeding frenzy and shoot their own foot.

The obvious potential big external shocks are, IMO

- A hard Brexit opted in UK
- A "Trump" president in US
- A "hard-landing" in China

I agree, the US interest rate hike, will be slow and mild, hardly quality for a "shock".

What do you think? Anyone to add into the list?  

I'll add another black swan event:

War/Terrorism

Between.... I dunno. Seems like everyone has an axe to grind with everyone these days!

It's actually quite eerie that 2 of the unthinkable happened Will China also hard land?

Personally I don't see a sharp US i/r rate increase but at most once a year for next 4 years, and I think USD strength will be reversed but yield curve is probably right on ie I think negative US interest rate will continue next 4 years.

Watch Singapore the canary in the coal mine. I still think 2017 is a recession year

The three black swan events is only unthinkable for those optimist. Personally I was backing a Trump presidency whilst for Brexit was on the fence. 

Hard landing for China IMHO is more or less confirmed the way they are pumping the economy every time it slows down, just a matter of when, perhaps the current flow of funds from E.M to USD will trigger it. In fact YUAN has gone down vs USD to even lower level than during the GFC times. Just last year august a 2% drop caused a short market selldown/panic and it was not even as low as now. ppl seems to have forgotten about that this year. I think when they do realise and panic it will be much sharper drop than what happened last year.

We also just had another earthquake in New Zealand and Japan, though not as disastrous as the previous ones in recent history.

Agree that 2017 is shaping up to be recession year, "highly possibly" It is hard to predict what direction the FED will go as they have to raise rates accordingly with inflation. In the recent past they have somehow managed to avoid the hyperinflation beast probably due to a severely depressed economy post GFC. But if US GDP growth starts growing in a big way from any further Trump stimulus or just from repatriation of the billions held by mega corps like Apple, etc.. then FED no choice have to raise rates and all the money will flow to USA away from the rest of the world. So end up China and ASEAN and South America might have recessions whilst USA enjoy all the money coming back. Look at the ringgit right now is a good example of what could happen.


On the flipside, it is encouraging to note that BDI is on the rise from 300 lows to 1200 now, likely reflecting a drop in supply from scrapping and consolidation of supply from Hanjin and other shippers going bust. Demand seems to have picked up a bit also. So shipping may be recovering from lows already. Though looking at big corps revenue, Caterpillar still reporting dropping revenue these past year so global economy is very likely still pretty weak.


BTW what do you mean US interest rate will continue in next 4 years? AFAIK only Europe and Japan have NIRP at the moment. US already raised rates last year once and now its still positive?

[weijian]

Interesting as market participants, we try to anticipate when the recession is coming/ Historically, the downturn of market indices generally come ~6-12months before the actual recession (which itself is only known after calculating the GDP numbers). As market participants, we (at least me) can't make money in a recession. We might make money in market downturns if we have cash heavy or have overvalued companies to short.

On hindsight, the potential recession at the end of this year seems to be reflected in the market downturn during end 2015-Feb 2016. So, lets say there will be a recession in 2H17. In present terms, this means a market downturn has to happen soon or should have already passed.

There isn't a boom to start with and some astute observers have flagged out that the wave of privatizations simply mean that valuations are poor in this part of the world. I also do notice a lot of market participants are much more cautious since the Aug2015-Feb2016 experience, which is still flesh in most folks' minds - there isn't enough complacency been built up yet although a new generation of people since GFC2009 have risen. All in all, from the market cycle/behavioral textbook case, it simply doesn't indicate any anomalies come 2017 for me.

But as usual, while I have skin in the game for 2017, I have already hedged emotionally for what is the unexpected non-consensus view.

[specuvestor]

^^ Hi Weijian, as an absolute return philosophy... don't lose money is at times better than taking risk to make money And don't confuse a cyclical recession with a bubble burst.

Bro Bluekelah

You have been saying China hardlanding for past 3 years. Eventually you will be right

US NEGATIVE REAL interest rate will continue for next 4 years.

[weijian]

hi specuvestor,
U called my bluff. i am nt really an economist. Actually, i cant differentiate nor do i care about the difference since i realized it is either too fuzzy or hard for my intellect. I would simply classify all of them as money making opportunities when i am ovee weight in cash.

The issue i find is the degree of caution, which doesnt satisfy the textbook nature of bursts. But maybe those who reject Helicopter Ben's policies for the last 7years, and have always been proven wrong, will have the last laugh one day? (just like bro blue kelah's hard landing call )