Recap 12-10-12: 2030 Outlook

Commentary:

Ok, so the title is a bit tongue in cheek. Of course, no one knows what will happen in 20 years. However, the US government has analysts who are paid to extrapolate that far, and some of their projections, while not necessarily earth shattering, provide good food for thought.

National Intelligence Council Report on the next 20 years: http://www.dni.gov/index.php/about/organization/national-intelligence-council-global-trends

  • 4 mega trends: the end of U.S. global dominance, the rising power of individuals against states, a rising middle class whose demands challenge governments, and a Gordian knot of water, food and energy shortages.
  • A return to pre-2008 growth rates and previous patterns of rapid globalization looks increasingly unlikely, at least for the next decade,” in part because total non-financial debt across G-7 countries has doubled since 1980 to 300 percent of GDP
  • world population projected to rise to 8.3 billion from 7.1 billion today by 2030 will add to the strains
  • Much of this growing middle class will flock to cities, increasing the world’s urban population from roughly 50 percent of the world’s total to nearly 60 percent by 2030.
  • Demand for food will rise 35 percent by 2030 as global gains in agricultural productivity decline, the report says.
  • Worldwide water requirements will reach 6,900 billion cubic meters in 2030, 40 percent more than current sustainable water supplies, making water a likely cause of regional conflicts, particularly in South Asia and the Middle East, the report says.
  • communications technology is shifting political power from nations “toward multifaceted and amorphous networks that will form to influence state and global actions,” the report says.

Notable:

  • Italian PM Monti confirmed over the weekend that he will resign from his post following the passage of the budget. Berlusconi’s PDL party pulled support by abstaining from economic reform votes at the end of last week. New elections will probably be held sometime in February. Monti is a lifetime senator, and may run as an official PM candidate. Berlusconi, however, has announced that he will run.
  • China Nov Data:
  1. IP rose 10.1% YoY vs 9.8% exp
  2. Retail Sales rose 14.9% vs 14.6% exp
  3. Exports rose 2.9% vs 9% exp. Imports were flat vs 2% exp.

FT: Hedge funds fall out of love with equities. At the end of the third quarter, both equity hedge funds and relative value arbitrage – a catch-all for a variety of fixed income strategies – managed $586bn each. “It’s highly likely that by the end of the year equities will no longer be the largest strategy, and that has never happened before”, said Ken Heinz, president of HFR

Upcoming Data:

  • Mon: China Data, Japan Current Account, Eco Watchers Survey, German Trade Balance, EU Sentix Investor Confidence, Canada Housing Starts
  • Tue: German Zew, USDA Ag report
  • Wed: UK Jobless Claims, Swiss Zew, EU IP, FOMC, FOMC SEP, Bernanke Speaks
  • Thu: SNB, Canada New Housing Price Index, US Retail Sales, PPI, Jobless Claims
  • Fri: EU PMI, EU CPI, USCPI, US Markit Preliminary PMI
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