After a pretty decent run as a prognosticator in 2012, I should probably quit while I’m ahead, but common sense has no business in the ego-driven world of punditry, so without further ado, here is a bunch of random predictions about what might happen in 2013. Last year I got all organized and broke everything down into neat little categories, this year I’m just shooting from the hip.
1) The USA Economy Will Continue to Surpass Expectations
Most of the talking heads on the tube claim that the USA is supposed to grow around 2-2.3% in 2013. I made the mistake of underestimating the recovery last year, and I won’t repeat that error. I believe the USA economy will end the year with GDP up 2.7-3% (after an initially rocky start). Jobs growth in multiple sectors, wars winding down, and a little more stability will also bring unemployment below 7%. While China and the other BRICS countries might be gaining more relative importance, it is still the American economic machine that is responsible for turning the world’s markets.
2) Political Gridlock Will Continue to be the Main Drag on the Stars and Stripes
The housing market is up, businesses are more competitive, and sentiment is gradually improving, so what could keep Uncle Sam down – only itself of course. It’s absolutely amazing to be how these legislators and the extremists that control the USA political system have been able to grind the country to a halt the past couple of years. Without getting too partisan, I’ll leave it at the idea that there is plenty of blame to go around. The fact that I find the most interesting (and telling) about American politics right now is that while the approval rating for congress as a whole is terrible and in the single digits most of the time, approval ratings for “your” congressman/congresswoman are still quite high. Which number do you think matters more to the guys/gals in charge? With the vast majority of representatives facing more serious threats from their own side of the aisle in primary races than in the general elections, I don’t really see how they stop this trend. When you add in the continuing huge influence of money and lobbyists within the system, it all looks even more bleak. I believe that when either side says they want compromise, what it really means is, “I want the other guys to come 90% of the way to my position.” For many reasons this continues to be the biggest factor holding the USA back.
3) Canada Will Continue to Tick Along
Sure, our treasured natural resources might be losing a little value right now, but Canada has several other things to feel good about. The housing market remains pretty robust outside of Toronto and Vancouver, the Keystone XL pipeline will almost assuredly be approved now that electoral posturing is over with (now if only we could get that Northern Gateway one going), and our banks are still the envy of the world. On top of all of these advantages Canada is currently enjoying the relative calm of a majority government that has proven to be a pretty good economic steward regardless of how you feel about their other policies. While the TSX won’t blow away the world in 2013, I believe that steady growth slightly below that of our big trading partners (in the 1-1.5% range) is in order. The best news for us indebted Gen Y’ers is that interest rates will remain untouched until 2014 due to American policies and low inflation numbers (somehow we will have to learn to survive without our economic rockstar – Mr. Carney).
4) MERs Will Continue to Get Slashed – Much to the Chagrin of the Financial Sector
By far our most popular and commented on articles in 2012 had to with Investor’s Group, and the broader issue of compensation for financial advice (well, that and the wedding ones anyway). With index-based investing and couch potato portfolios gaining in popularity, mutual fund providers will have no choice but to cut costs in order to appeal to fee-conscious investors. This is especially true for Canadians who have the most to gain from falling MERs, and with Vanguard moving in, these savings are almost a guarantee.
5) Fossil Fuel Prices Fall
Blah Blah, Peak Oil Blah Blah. That pretty much sums up the conventional thinking on fossil fuel dependence over the last few decades. Yes, one day we will run out of liquid gold and that will mean many things – but that day is definitely not today or tomorrow. Several of my friends in the world of geology tell me that all the recent research coming in on fracking reveals that it is relatively safe and almost assuredly does not produce earthquakes of any kind, nor does it directly pollute groundwater. With the recent developments all over North America, a return to relatively cheap oil and natural gas looks to be around for a while.
6) The NHL Lockout Cancels Season…
Suckers Fans Come Back Anyway
I recently wrote a rant/article about this situation that is worth reading if you’re a hockey fan, or just confused by this whole mess. Hockey players are pretty unique in the world of professional athletics (I like to think this is a result of our wacky Canadian influence) and if you back them into a corner they will make huge sacrifices in the name of pride. Many of the owners couldn’t care less about their hockey teams since they are glorified hood ornaments for billionaires and consequently it is the fans that get to suffer – but only because they allow themselves to. The only reason these guys are still fighting is that they are calculating that all of us will be crazy enough to come back and buy their product again like we did after the last lockout. Not this former fan. I’ll stick to watching the World Junior Tournament, international hockey, college/junior hockey, local high school games, and maybe JUST the Stanley Cup Finals to get my hockey fix. Please take note of this advertisers.
*Editors Note: TM made these predictions a couple of weeks ago. He is already wrong… so great start to 2013 predictions eh? At least the part about fans coming back anyway seems to be true.
7) The Heat, Blue Jays, and Patriots Will Be The Teams of 2013
Lebron is historically good, and with him at power forward the Heat are able to reach a level that no one else can touch right now. The Patriots are another predictable pick, and admittedly one that is heavily influenced by my fan bias (aka bromance with Tom Brady). Their experience and focus on execution will propel them into the history books. Finally, in all of my patriotic pride I am jumping on the Blue Jay’s bandwagon for the first time in years. I know that teams put together through free agency rarely win championships their first year together, but this rotation and lineup, as well as the fact that their division actually appears winnable for once, makes me think this is the year for our team! Joe Carter forever!
8) The S&P 500 Breaks All-Time Highs in 2013
The last time the S&P 500 broke 1,575 was in 2007. That ceiling will be pushed through in 2013. For all of the reasons I listed above, the American economy will do just fine. I actually see potential for a major rally if congress were to work together and get a long term deal done that seen several compromises made, including entitlements, tax bases, and simplification of the tax code. Of course in theory there is is potential for pigs to fly as well, so as vague predictions go I’ll temper my expectations and say that the index finishes right around 1600 in 2013.
9) Young and Thrifty Continues to be a Trend-Setter and Leader in Personal Finance
Does this one really need an explanation/justification 😉