Economic Predictions 2017 – What Will Come
I am not very good in making projections. I am also a vocal critic on people who follow other people’s predictions. In the past however, I have made some really good calls that have turned out to be right. In May, I predicted that the leave campaign would win Brexit. Later on, I predicted that the Donald Trump would win the election. Before that, I predicted that oil price would stabilize. These predictions do not make me an expert forecaster. In this article, I will highlight a few economic predictions I make for 2017.
#1 – Parity
I believe that in 2017, we will witness parity between the United States dollar and the Euro. I base this on a number of factors. One, I believe that the dollar will continue to strengthen in the first quarter. This is as a result of Donald Trump who promises a new wave of economic growth. He promises to reduce corporate taxes and end job killing regulations that have led to stagnation. On the other hand, the European markets will continue to face a major challenge because of a number of factors. One, the upcoming elections in France and Germany will be a major test in the zone. Second, the rise of populists will continue to grow in Europe. Third, the terrorist activities in the zone will increase because of the open border policies. All these things will weaken the Euro.
#2 – Stocks Will Fall
That was the first of these economic predictions. Then, In the United States, the stock market has seen major gains during the year. This is because of a strong economic growth in the United States. Following Trump’s win, the Dow, S&P, and the Nasdaq have reached their all-time highs. This has made the US stock market very expensive. The S&P 500 has a price to earnings ratio of 26, Dow has a PE of 21 while the Nasdaq has a PE of 24.5. To starters, this means that investors are willing to pay a more than 20 premium on the stocks. A company like Amazon has a PE ratio of 173 while Apple has a PE of 28.87. One of the reason behind all these high valuations is Donald Trump. However, Trump is known for being erratic. His comments can lead to a hard landing for the stock market.
#3 – Oil Might not Rise as Anticipated
Many experts believe that the oil price will go up because of the recent agreement by OPEC and non-OPEC members. If these cuts are actualized, there is no doubt that we could see oil prices go up tremendously. However, these blocks are known for cheating and distrust. Many experts believe that we can see oil prices rise up to $100 a barrel. Conservative analysts place their bets at about $70. I believe that these countries will cheat. This will bring the oil prices to below $30 a barrel during the year.
#4 – Year of Volatility
I predict that 2017 will be a volatile year for the global financial market. This volatility will mostly come from Donald Trump. Many commentators have called him Twitter in Chief because of the way he uses Twitter to communicate. This year, he has used the tool to communicate about nuclear proliferation, Israel relations, and his views on terrorism. He has also used Twitter to negotiate deals with Boeing and Lockheed Martin. I believe that his Twitter accounts will lead to more volatility in the market. He will use Twitter to blast dissenting opinions which could have dire effects.
#5 – FANG Will Fall
FANG (Facebook, Amazon, Netflix, and Google) have experienced an increased growth in the past. I however believe that the best days of these FANG stocks are behind them. Facebook (PE of 56 ) has been caught lying about its numbers. In the coming year, the company will report stagnant growth which will lead to significant declines in its share price. Amazon, with a PE of 173 is highly overvalued and will likely see a correction. Netflix, with a PE ratio of 373 will see declining members as competition with Amazon bites. Google, with a PE of 28 will experience trouble because of its accounting and foreign lawsuits.