Ad Hoc Commentary – the Wooden Horse Year: Greeks gave Franco-German a Wooden (Trojan) Horse?

Nearly everyone in the markets is superstitious – you see it from the figurines, money plants, coins, and even the lucky tie they wear. Reuters has a good article on what does Hong Kong feng shui masters expect for the year.

In short:
1. strong gains in stocks
2. people fighting for ideals
3. regional warfare
4. property slowdown
5. natural disasters
6. sex scandals
7. tough year for people born under the year of the Horse

For item 1, yours truly agree. We sell off into early Feb and rally from then till perhaps Oct 20 when comet Siding Spring makes a close pass at the planet Mars.

Item 2 and 3 sits well with our view that 2014 is the year of resentment. The work question (the fight for a right to work) will foster solidarity among the unemployed. The worker/proletariat question (the fight for just wage) of yesteryears brought about important socio-political changes. The work question of today should be equally powerful if not more. Expect more social unrest.

For item 4, yours truly is no property expert. But in Singapore, yours truly believe that public housing (which makes up the majority of homes in Singapore) will likely have a significant enough fall. Singapore public housing (HDBs) is a closed economy where the government controls both supply and demand. They control the former by building more houses and the latter by keeping out new buyers – mainly by controlling permanent resident approvals. Yours truly will not extrapolate the same bearish prediction for private housing in Singapore because private housing has no buying restriction based on nationality. Thus, the demand is global. Simply said, you cannot stop rich Europeans fearing European taxation from parking their wealth in private housing here.

Item 5 looks likely. Even the sun is said to be entering into a grand minimum. If we really enter into a Maunder Minimum, then wheat prices that had been coming off could just rebound into another spike. No comments on item 6.

Item 7 is very interesting because Merkel and Hollande are both born in the year of the Horse, 1954. That sits well with our prediction that the European sovereign debt crisis had returned to Europe to target the Franco-German core. Is history repeating itself again now with the Greeks giving France and Germany the Trojan horse of sovereign debt crisis? Perhaps the wooden Trojan horse will show its true color to Merkel-Hollande this year. We have European elections in May. If they love Europe, they should develop the infrastructure asset class that we had been talking about. Yours truly still believe that EUR/USD is a sell this year.

We should add that the year of the Horse welcomes Yellen as new Fed Chairwoman. As yours truly asserted in the past, Yellen will likely have a nice honeymoon until late 2015, at which point she would likely need to find buyers in the bond markets.

Good luck in the year of the horse!