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2015-01-01 22:21:30 UTC
Jonathan Ratner | December 31, 2014 | http://business.financialpost.com/
5 predictions for 2015 and 5 surprises from 2014
Douglas Porter, chief economist at BMO Capital Markets, blames lower oil prices
on abundant supplies in North America, the resumption of Libyan exports, the
end of QE, OPEC's unwillingness to support the market, and growth concerns in
Europe, China and Japan
A bet on higher interest rates was perhaps the call most investors got wrong in
2014, as the yield on 10-year U.S. treasuries fell more than 80 basis points.
That brought them to levels not seen since prior to the Taper Tantrum of May
2013, even though the U.S. Federal Reserve’s exit from quantitative easing came
right on schedule.
The move in yields was one of five surprises markets encountered this year, as
highlighted by Douglas Porter, chief economist at BMO Capital Markets.
Another was one of the largest annual declines in oil prices. Both WTI and
Brent plunged more than 40%, second only to 2008 in terms of deepest full-year
drops.
Mr. Porter blames abundant supplies in North America, the resumption of Libyan
exports, the end of QE, unwillingness by the Organization of the Petroleum
Exporting Countries to support the market, and growth concerns in Europe, China
and Japan.
The economist also highlighted yet another upside surprise by the Canadian
housing market as home price gains exceeded those in the U.S. Toronto, the
city most cited as being overbuilt and vulnerable, proved to be the hottest
market as it posted an 8% annual gain in average transaction price.
Other surprises noted were Canada’s move from having one of the lowest
inflation rates in the world to one of the highest among industrial economies,
and Argentina’s stock market
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posting the biggest gains of the year among significant nations, despite
defaulting for the second time since 2002.
As for what Mr. Porter sees ahead in 2015, he expects the U.S. will continue to
be the fastest-growing major economy in the world, the Fed will raise rates for
the first time in more than nine years, and the U.S. dollar will again be the
strongest currency globally.
The economist also anticipates the U.S. jobless rate will dip below that of
Germany, perhaps falling below 5% by late 2015.
For Canada, he sees plunging oil prices tilting regional growth in favour of
Central Canada. (Uh, that would be Kathleen Wynne country . . . ヽ(^。^)ノ
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
_____________________________________
“Stronger U.S. growth, a weaker loonie, and lower oil prices are all helpful
for Ontario and Quebec,” Mr. Porter said. “On the flip side, Alberta will see a
rare spell of below-average growth.”
5 predictions for 2015 and 5 surprises from 2014
Douglas Porter, chief economist at BMO Capital Markets, blames lower oil prices
on abundant supplies in North America, the resumption of Libyan exports, the
end of QE, OPEC's unwillingness to support the market, and growth concerns in
Europe, China and Japan
A bet on higher interest rates was perhaps the call most investors got wrong in
2014, as the yield on 10-year U.S. treasuries fell more than 80 basis points.
That brought them to levels not seen since prior to the Taper Tantrum of May
2013, even though the U.S. Federal Reserve’s exit from quantitative easing came
right on schedule.
The move in yields was one of five surprises markets encountered this year, as
highlighted by Douglas Porter, chief economist at BMO Capital Markets.
Another was one of the largest annual declines in oil prices. Both WTI and
Brent plunged more than 40%, second only to 2008 in terms of deepest full-year
drops.
Mr. Porter blames abundant supplies in North America, the resumption of Libyan
exports, the end of QE, unwillingness by the Organization of the Petroleum
Exporting Countries to support the market, and growth concerns in Europe, China
and Japan.
The economist also highlighted yet another upside surprise by the Canadian
housing market as home price gains exceeded those in the U.S. Toronto, the
city most cited as being overbuilt and vulnerable, proved to be the hottest
market as it posted an 8% annual gain in average transaction price.
Other surprises noted were Canada’s move from having one of the lowest
inflation rates in the world to one of the highest among industrial economies,
and Argentina’s stock market
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
posting the biggest gains of the year among significant nations, despite
defaulting for the second time since 2002.
As for what Mr. Porter sees ahead in 2015, he expects the U.S. will continue to
be the fastest-growing major economy in the world, the Fed will raise rates for
the first time in more than nine years, and the U.S. dollar will again be the
strongest currency globally.
The economist also anticipates the U.S. jobless rate will dip below that of
Germany, perhaps falling below 5% by late 2015.
For Canada, he sees plunging oil prices tilting regional growth in favour of
Central Canada. (Uh, that would be Kathleen Wynne country . . . ヽ(^。^)ノ
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
_____________________________________
“Stronger U.S. growth, a weaker loonie, and lower oil prices are all helpful
for Ontario and Quebec,” Mr. Porter said. “On the flip side, Alberta will see a
rare spell of below-average growth.”