ONE aspect of the changing trend of the Economic Confidence Model (ECM) is the political predictions for 2016. As in the change of the seasons, whether autumn to winter in the north or wet to dry in the tropics, there are forerunners before the big changes occur.
We are now seeing the precursors of the 2016 political change. In the last 30 days, both Australia and, most recently, Canada have changed leaders. For Canada, the government will now be more “left-wing” from a former “right-wing” government. Australia’s new prime minister, although saying he had no intention of making any immediate changes, has historically been a strong advocate of “Australian republicanism.” Few people know that the Australian Head of State is actually the Queen of England. The prime minister is only the head of government.
The installation of both of these new leaders marks a reversal of current policy and direction. Further, the ECM forecasts a larger than average voter turnout for elections in 2016. For example, the recent election in Canada showed voter turnout at 68.5 percent, the highest level since 1993.
Canada and Australia are actually minor countries in the overall scheme of things. They may be large in size but are small in population, and are both dwarfed in influence by their combined regional neighbors. Further, their economies are both natural-resource export based and, therefore, are not global economic drivers but only benefit from global economic growth.
The ECM predicts that 2016 will see a massive change from the current political leadership to either opposing political views or complete outsiders.
The Democrat Party nomination for US president in 2016 was supposed to be merely a guaranteed “coronation” for Hillary Clinton and it may still well be. However, Clinton is being strongly challenged by a sitting US senator who is not even a member of the Democrat Party but has been repeatedly elected as an “Independent.”
The Republican Party race is now led by businessman Donald Trump and retired neurosurgeon Ben Carson, neither of whom has ever run for or held political office and who together command just under 50 percent of the total potential Republican voter preference. This is a huge development in US politics, which is known for its final presidential candidates always being part of the political elite or chosen by those elite.
What the turning of the ECM means for Philippine politics is hard to say at this point as the candidates are all experienced political officeholders or have been selected by the political establishment.
However, the ECM is obviously not only about economic changes, as the ECM embodies and is surrounded by other cycles, including the Cycle of Wars and the political cycle of which I spoke. The key to the deal is change, from confident trust in what has been to a lack of trust in the status quo—existing state of affairs—and a change to something different, maybe even the complete opposite.
The last eight weeks of trading on the Philippine Stock Exchange have been unlike anything seen since 2006. After a massive drop and then a massive price recovery in the same week, stocks have been locked in relatively narrow range, not wanting to break out in either direction. Even a nearly similar fall in September 2014 was followed by a complete recovery (before going down again) within a month.
This situation has traditional Philippine stock brokers, unbiased market analysts and “wannabe experts” pounding their heads against the wall, totally confused and trying to figure out what is going on. It is no different than the political experts in the US trying to figure out what is happening in their highly scientific but failing election scenarios. Likewise, Europe and the US are trying to figure out how Vladimir Putin and Russia just took over military and political leadership in the Middle East. That was not supposed to happen either.
The turning points on the ECM have been accurate for hundreds of years; but who cares. What we need to care about, for example, is that its sub-cycle—the “Real Estate Business Cycle”—called almost to the exact day of the peak when the subprime real-estate mortgage market exploded.
Major ECM changes have rarely been pretty and have always created great disappointment with what we thought was reliable analysis and opinion across all disciplines. If the lack of accuracy of many local stockbroker recommendations—both buy and sell—over the last three months is any indication, to quote American songwriter Bob Dylan, “The times they are a-changin’” in our stock market.
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