WE mark milestones as dates on the calendar. The cycle of our personal lives are celebrated by a birthday. The Christian faith marks the fixed date of the Christmas birth. Most of us look backwards with successes and failures and forward with added experience each New Year.
The cycles never end, including the one we can never change—birth, life and death. Yet, the western mind-set and world view refuses to accept that the cycles are part of the universe and are part of everything in our world.
From examining the cycles, patterns emerge. For example, if you look at the timing of every financial panic between 1683 and 1907, on average, there had been a panic every 8.6 years. And then a pattern emerges. If you count the number of days in 8.6 years, it is 3,141. That is one thousand times pi. If pi is essential to the physical world, maybe it helps govern what happens in the markets and even with fluctuations in human behavior.
What cycle may we be facing into 2018?
For the past two years, I have been ranting about how we have been in a time of political chaos and change. The only traditional political party that was able to gain more power was the Communist Party in China. OK, the Liberal Democratic Party in Japan of Shinzo Abe is stronger, but Abe also broke with the “Liberal” part of LDP by calling for the increased militarization of Japan.
Every time there has been a period of political upheaval, this was followed by a period of economic chaos, and this should take place beginning 2018 through 2020. As I said before, a clear indication for this will be a strong—not weaker—dollar. Europe cannot afford any capital flight into the US dollar. Further, an increase in US interest rates would be bad for the United States government when paying or servicing its debt. Such would also raise the attractiveness of investing in the US.
In spite of terrible approval ratings, President Donald J. Trump is getting high marks—very high marks—from the public on the economic issues. Consumer confidence is at the highest level in almost 17 years. While the media and press bash the new tax laws in the United States, the results will be so positive that the Australian Minster of Finance is saying that his country’s economic growth may be as much as 1 percent slower as business moves to more favorable condition in the US.
Here in the Philippines the new tax laws will also have a favorable impact, although there will be some price increases.
My personal view of the Philippine economy—and the stock market for that matter—is that the first half of 2017 was not impressive. It was as if the engine was idling at normal speed and not any more. I do not feel as though the economy or the market was moving much. The second half of the year was only slightly changed in that at least we are moving forward now. What I see for 2018 is that we will start building momentum that should carry through to at least the third quarter.
Having said that, note that my optimism applies only to the Philippines. I would not place any bets longer than one year. The next six months are going to provide great money-making opportunities in both business and the stock market. But, like Joseph of ancient Egypt, use that time to fill your barns just incase a famine comes. Happy New Year!
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.