Jim O’Neill predicted chairman of Goldman Sachs Asset Management stock market boom in the United States this year, and as much as gains an average of 14%.
He continued: There is a set of directories on the disintegration of correlations between markets affected by the financial crisis since 2008 (including, for example, lower euro exchange rate against the U.S. dollar, despite robust stock), as there is movement and clear, especially with regard to inquiries investors, about moving from bonds to stocks
He said in his report: The developments would have led to a financial slope in the United States have become important at the moment, or at least for two months verge!
He added: created a set of important data in the United States and other positive surprises during the festive period, and beyond. While local companies continued in both China and Japan to strengthen the performance of the stock markets well during the holiday season, indicating a positive performance in the rest of the world, and this is of course good news for those who invest in these countries.
With regard to the question of financial slope in the United States, O’Neill said: everyone is now wondering argue and worry about the same problem with the end of February, at which time some of which refers to the future challenges associated with fiscal policy as’ three valleys.
With regard to the Congress passing and what he avoid it, and what it means fiscal policy, reliable estimates indicate that the year 2013 would involve a decrease of approximately 5.1 to 6.1% in the U.S. GDP, which is what the majority sees his health, in terms of being reliable, but will have a deep impact on the economy.
With regard to the upcoming battle between the White House and Republicans in the House of Representatives, the majority of the votes think that the battle for February will be far more severe because you can not raise the debt ceiling only if approved by the Republicans to cut costs dramatically. Not be a final opinion yet, but I would like to note that the breadth of the horizon of interesting maneuvers and will make it harder to reach agreement in a timely manner.
Said O’Neill: What were not jobs data in December weak suddenly, the recent data in the United States show economic improvement last, including the latest indicators manufacturing, which rose to 50.7%, and the continued increase in the difference between new orders and inventory, which is a signal positive for the future.
Interestingly to see a relatively new version of Markit, a U.S. index of purchasing managers, rising from 52.8% to 54% in November.
Before the announcement of data functions, the National Employment report not only on the rise by more than the expected figure of $ 125 thousand, but has also re-assess the number of new jobs in the previous month to 148 thousand. All this came in the wake of the continuing good data in the housing sector and the sharp rise in the last long-term commodity reports, indicating that the investment may not be as weak as it was earlier.
He continued: talking Committee Meeting Minutes Federal Open Market which took place on Thursday on the problem of not feeling all members of the Committee of the importance of the extent to which quantitative easing in 2013.
If unemployment rates continue to decline, it seems that the U.S. bond market will be sensitive to this matter, and if so the big question will be about including that was the result of a change in the relationship between stocks and bonds, or whether stocks will continue to rise.
Regarding the issue of change in the balance of energy, it has been sparking my interest that I read about plans MEED American Holding Energy to invest $ 2.5 billion in solar power plant in California, indicating that the oil shale and gas are not the elements only two witness a major change, the matter broader likely.
And outside the United States the data since the festive period more mixed, but in terms of manufacturing, rose JP Morgan Global to 50.2%, the first rise in more than 50% since last May, while showed a group of emerging economies major figures especially good in India ( and services index rose sharply as well).
In developed countries the United Kingdom has seen obvious improvement, where the numbers jumped to 51.4%. One would like to believe that real growth in the United Kingdom, but the data pattern was irregular since the summer of 2012, making it difficult to trust informed.
Overall, the indicators in the euro zone a little disappointing, with Germany and Spain saw lower-than-expected performance, but Italy has achieved a remarkable and sudden leap, to reach 46.7%, the highest number among the four largest European economies.
Manufacturing in Germany
Not reflected the disappointing performance of manufacturing index in Germany to other data or the mood in Germany. Porsche has announced sales for the year 2012 which amounted to a record and achieved a rise of 21% compared with the year 2011.
A survey conducted by Ernst & Young that German consumers feel reassured, where it is believed 88% of the participants in the survey that they have job security. This confirms to a large degree the German services index rose to 52%, which may not be up quick PMI (Flash PMI) but evidence supports the fact that Germany are showing strong signs to restore the balance.
Korea and China
In Korea export performance was disappointing in terms of expectations from me down an annual rate of 5.5%, but rose after adjusting for the real numbers of working days to represents a rise of 7.7%.
In China were not PMI level hopefully, it remained official indicator in the same level as in December when 50.7%, despite the fact that the index HSBC showed a rise to 51.5%, while showed PMI official services sector another leap to 56.2 %.
The year 2012 special, especially with the rise in the Chinese stock markets in the wake of change of power and the continued improvement until the last days of the year, to prevent the performance of the year at the positive side and the country has seen a rise of 15% from the low levels.
China announced earlier this week that it plans to invest about U.S. $ 11.2 billion in Cambodia, which is a huge investment for the country, will include a number of infrastructure projects over the next four years.
India’s balance of payments
The deterioration of the current account deficit in the balance of payments in India again in the third quarter of 2012, rising to 5.4% of GDP and is transformed into index must be pursued carefully. In contrast, and perhaps as a result, policymakers trying to reduce imports of gold higher, given the big role in contributing to the problem.
In return, sent me some materials in India about the beginnings of other policy-related problems, including associated project ‘unique identity’ launched by the government a few years ago, is about to launch what is called the ‘direct cash transfers based on the unique identity program, has be extremely useful in reducing wastage and losses in government programs and helps to improve the banking system. It looks promising growth prospects are excellent.
Season begins shift from bonds to stocks
Jim O’Neill confirmed that the proportion of risk insurance stocks are still very high in the United States and abroad, and of course, the actual interest rates are very low. Since last fall turned some of the leading indicators and the crossbar to more positive levels.
The evidence suggests that the risk of a huge investment in government bonds, where the purchase of central banks of the Group of Seven of their local markets biggest factor support.
He added: raises our obvious difference between the members of the Committee Federal Open Market on the degree of quantitative easing, which must seek them, it is not surprising that the U.S. bond market has suffered a bit of weakness. This increases the importance of the jobs report.
It may also mean the possibility of starting investors shift from bonds to equities. As a major multi-product asset management, we do not see clear signs of this happening, but given that we are on the fourth of January day, it is not unlikely that long-term investors to take decision at that speed.
Can imagine many interesting dialogues during meetings of the Trustees of pension funds and other investment. It is clear from the weekly data on exchange-traded funds that recent flows to equity funds were far greater than those to bonds.
Some say that U.S. stocks weaken in the event of rising U.S. bond yields, for the obvious reason is that high earnings are competing, perhaps because of low liquidity. Others focuses on the perspective of my governor, Kalnsb amended periodically between price and earnings CAPE, that equities are no longer attractive as before.
In accounts of Goldman Sachs Asset Management to that percentage, U.S. stock prices are not low but will become more expensive again (as with bonds for several years) in the case is about a shift in trading to start.
Many of the markets around the world are still low on the basis of assessments adjusted ratios between price and earnings, whether in Japan or most of Europe, and of course the world of emerging markets and a number of emerging markets.