Six financial predictions for the year ahead

If the last couple of years have taught us anything, it’s this: that all of our crystal balls are broken and that projections are scarcely worth the hot air they’re broadcast on. Trump, Brexit, the sweep of populism, the grip of protectionism — each makes the future more unknowable than ever before, and renders most soothsayers decidedly egg-faced come year end. Undeterred, the quants over at Gentleman’s Journal would like to advance six theories for the financial world in the coming months, along with their predicted vision of the markets for the rest of 2019. ,

The end of 2018 saw a considerable decline in oil prices, largely thanks to a bumper yield by our American friends. That’s not likely to change in 2019, as new wells get drilled left, right and centre, and production shows no sign of slowing.

OPEC, the international oil cartel, has put in measure to curb global production with the hopes of pumping up prices again. But this will do little to effect the long-term picture of supply. There’s still going to be a hell of a lot of oil sloshing around, and production can be increased again at any time — as most investors know. Add to that the rise of electric cars and a gently cooling world economy, and you’ve got a perfect storm for declining oil prices. The Financial Times predicts Brent Crude will drop to below $60 a barrel by the end of 2019.

There was a great deal of hype last year about Uber’s impending IPO, and its potential to smash global historic records when it finally pulls the trigger on a public deal. After all, the highly-sought after personal mobility space is dominated by the company, with its 69% market share in the US and presence across 70 other countries. (Uber also has a diverse raft of secondary business segments, such as UberEats and its freight offering). But all is not

Nevertheless, the record $25 billion that Alibaba raised in its IPO (at a valuation of £170 billion) in 2014 seems far out of Uber’s reach. The equities market has been particularly fickle of late, and tech stocks have had a tough time recently. Then there’s the company’s recent operating losses, and the rising cost of acquiring new markets — not to mention the competition from Lyft (which has aggressively eaten into Uber’s American pie) and a host of local rivals. A more realistic valuation would be just north of $100 billion — which would still put it slightly above Facebook’s IPO.,

There are reasons to be slightly gloomy on this front — interest rates remain low, debt levels are very high, and a huge amount of assets are probably vastly overpriced. And that’s before you get to individual economies — a cooling Chinese dragon, the turbulence of Brexit, Italy’s sovereign debt…

But it’s pretty unlikely that we’ll see a global crisis anywhere near the level of 2008. The balance sheets of almost all notable institutions have strengthened substantially in the last decade, thanks to regulation brought in after the 2008 crash. This will help significantly in the coming storm.

One of the longest bull runs in Wall Street history may be about to come to an end. The factors that helped turbocharge the US markets — Donald Trump’s fiscal policy, the strength of the global economy — may be losing their lustre. The Financial Time’s notes how US “earnings growth will be slower and margins compressed.” There are also various risks in Italy, and its potential sovereign debt crisis, while Turkey, Venezuela and Argentina could all hit the wider global economy with their respective crises. That fabled 3,000 mark will not be broken yet.

House prices are the golden yardstick as far as economic health goes. And 2019 doesn’t look particularly promising in that regard. The collective predictions of various think tanks and consultancies range between the hugely conservative and the doomy and gloomy — with some commentators predicting falls of over a third in the coming year, depending on the fallout from Brexit.

At the very least, things will remain a little timid. When buyers and sellers are unsure about what the future holds, they put any big plans on hold. And Brexit, with all its potential outcomes and complex wranglings, is a maelstrom of uncertainty.

The original drop in Apple’s peerless valuation (which saw a quarter of the tech giant’s value shaved off in 2018) was triggered by one quarters’ worth of guidance and the decision to stop reporting product-level sales figures.

But Apple is still doing incredibly well in almost every metric that matters, and its customers are fiercely loyal. The company’s holiday numbers were also strong. But more interesting still is the attention Apple is getting from some very influential investors indeed. Warren Buffet has been buying Apple stock by the truckload recently, and more investors will follow. The scene is set for Apple to rally to its $1 trillion market cap yet again.

Now read this: the best cardholders your (sensibly invested) money can buy…

Become a Gentleman’s Journal Member?

Like the Gentleman’s Journal? Why not join the Clubhouse, a special kind of private club where members receive offers and experiences from hand-picked, premium brands. You will also receive invites to exclusive events, the quarterly print magazine delivered directly to your door and your own membership card.

Click here to find out more