Saturday, January 03, 2015

2015

Projecting what will happen in 2015 is an exercise in fantasy.  Fantasy is not out of bounds here. Maybe it is a skill.

We start 2015 with a global set of difficult situations, in fact dire situations, that are too numerous to detail or project anything about.  Our world, in looking at it completely, has many areas that are out of any control.  That is particularly due to the radical proponents of Islam, fake or real, who are vicious predators. Dealing with them is not simple and not solely the responsibility of the U.S.  These extreme Islamists provide a backdrop to 2015 that is wary.  We also cannot dismiss the unpredictable or all too predictable Russian nationalist Putin who, in his self-enforced isolation, is entirely capable of doing something really stupid

There are many other "powder kegs" in the world that could be on the tip of the tongue of any informed person.  Some of those are detailed in a bloomberg.com article today.  Not all.

For a 2015 OUTLOOK that does not include a complete unhinging of these concerns, we look at financial markets that could be stable overall, but volatile in the near term.  Retrenchment will probably come in the next few months as informed players give way to the less informed and let them have their way.  Those who have stayed in the game will do so and take the opportunity to buy and sell, reset their portfolios, while those who were "once burned" will once again lose out.  In the major market of China, there are few upper middle class "once burned", and that will be a big test of that equity market's stability when a decline does  eventually come.

Here in the grand semi-old U.S. for now(cannot say old since we sold a building built in 1778 here in 2012), any market recoil will result in more cash and the question of what to do with it.  Buy more groceries, buy more cheap gas, invest in more properties with their overhead costs, buy gold or commodities, there is no simple answer.  The fact is that with zero interest rates, or even marginally higher rates, in any declining stock market there will need to be some outlet for cash.  It could in fact buoy the economy in the short term, but it is no long term solution to the type of growth that this country needs, or that the developed economies of the world need.

With that perspective and that progression, the market will move up again during 2015 as where else can the money go?  There can always be a fundamental reset of values, but that is not seen as coming near term.  Getting back to early 2000's market levels as we have on a non-inflation adjusted basis is no heroic feat.  Our financial markets, especially equities, have room to sort things out and go higher, led by specific companies with strong balance sheets and reliable growth.  That's big caps, and for small caps there is a dice game going on that can lead to big gains or some amount of losses.  What's new?  The bias here is that the equity markets in the aggregate will go up marginally in a volatile way and that the bond market will finally begin to give up some gains in a modest way.  On the bond market that's a wimpy statement, as any deflation that no one wants to even talk about or even think about could turn that projection around.  2015 will be a pivotal year.

On perhaps a more important front there may be, with big hope that this is right, a creative resurgence in the U.S. and parts of the world that is already underway.  Some of the new writing, fiction and non-fiction, is riveting and mind bending.  It's both from a new generation that is coming into its own and the boomer generation that is producing its culminating great works.  Whether writing or film or music, the good new stuff needs to break through the mass of corporate pablum.  It will begin to do that in 2015 more than any other recent year.  Creativity is on the rise, and why would that need to be another comment of some questionable credibility.  It just is.  That is by far the most positive possible attribute of the just beginning 2015.

To all of those working to manage, produce, contribute to, and creatively think about an honest and credible 2015, it must be said that there is room for improvement in most quarters.  Or most, it should be said, since saints still exist.  I know some, and three of them passed away recent months, Janet, Mu Chin, and Dolichos.  We are just getting accustomed to this.

Our life here, as said in  a recent comment, will be one of acceptance and inevitable but unpredictable change.  At its core, I do not like change but it will come. That's not any type of Sam Cooke monumental statement, just a simple fact from folks deciding on a next step.

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