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Does this graph confirm that the low in commodity prices is in place?

Posted by on Apr 2, 2016 in 18 year real estate cycle, Forecasts, Kondratieff (Long) wave cycle, Reports |

In February, National Australia Bank suggested that house prices in Perth would continue to fall in 2016 because of weakness in commodity prices, as mining companies shed staff and the domestic economy continued to experience weak growth and high unemployment. Here is the story. The article notes the link between the commodity and housing markets – which is strong in regions and countries that are strong commodity producers (Australia, parts of the US and Canada, Latin America and much of Africa, for example). I’ve set out my forecast for commodity prices in my recent report The Fifth Wave: Long-Term Commodity Prices and How to Profit from Them. With that in mind, I am a keen follower of the property markets in commodity-rich regions. In Australia, the Western Australian property market, particularly Perth, is something to look at given the importance of mining and other resource extraction to the local economy. Real estate prices recovered across Australia around 2012. But in 2012, commodity prices were still high and so Perth led the way. See the graphic below. Data source: Australian Bureau of Statistics   But from 2014 onwards (in particular) commodity prices fell sharply. It’s no surprise then that 2014 was a bad year for the Perth real estate market. As real estate prices in Australia continued to grow, they stalled in Perth. And then they started to fall. This continued into 2015. You can see from the graph above that during 2015 there was a major divergence between the general Australian market and Perth. Note, however, that in the last quarter of 2015 house prices in Perth ticked up slightly. So this begs the question: is the market turning around? From the evidence of the graph it’s possibly a little early to say. However, this is where our cycles work on commodities helps. A turn around in property prices would be consistent with our commodity price forecast – we are on the look out for a low in 2016. And expect also that rises from here will be seen in the housing market as companies once again expand and there is a return in demand for real estate. Since the lows in January, commodity prices have had a good run. See the chart below.   The next test of these lows will be interesting. Should they be higher lows, we are looking upwards for commodities and real estate....

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Four Cycles to help Investors and Traders

Posted by on Aug 13, 2014 in 18 year real estate cycle, Kondratieff (Long) wave cycle, Reports |

We have just launched our latest report: Four Cycles to help Investors and Traders. In this 27 page report, we provide you with a detailed look at four key investor cycles that shape the long-term direction of global markets. You can apply this ‘big picture’ knowledge to your own investment decisions. We are firmly of the view that the best long-term investments follow the major secular market trends. This report will take you through those. In the report, we tell you: why in 2012, when there were still significant eurozone worries and US deficit issues, we knew that stock markets would have a bull year and why we are looking for a market low in the next six months why we don’t think that Western governments’ money printing will lead to major inflationary issues why we we live in an era of low interest rates why the coming boom will be the biggest of all time The four cycles we cover in the report are: Investor Cycle #1: The US Presidential Cycle Investor Cycle #2: The 18.6 year Real Estate Cycle Investor Cycle #3: The Kondratieff Wave (50-60 year commodity cycle) Investor Cycle #4: The Great Wave (the 100 year inflationary revolution and equilibrium) Any investors with a long-term investment horizon will benefit from the insights contained in this report.  For details on how to obtain this report, please visit our Reports...

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Why the coming cycle will be the biggest in history

Posted by on Feb 16, 2014 in 18 year real estate cycle, Forecasts, Kondratieff (Long) wave cycle |

Previous posts have described how the 18 year economic/real estate cycle operates.  In our stylised diagram illustrating how the cycle unfolds, we are of the view that Western economies have now been through its cyclical crash and recovery phase that lasts on average 4 years and are now in the first expansion of the cycle. The post examines some of the trends that will determine how large the next cycle will be.   How big will the next cycle be? We are of the view that this next cycle will be the biggest ever.  To say again: we think that more wealth will be created in the next 10-15 years than in any equivalent period in human history.  It’s going to be a period of enormous wealth creation.  We advise not paying much attention to those with a bearish outlook on the world economy. The normal expansionary phases of the economic cycle are going to benefit from the following growth-enhancing trends. 1. Relentless technological innovation The internet and personal computing have fundamentally altered the way we communicate, do business and interact socially.  But I think that this revolution has only just begun.  We are only just getting to the point where product and service design can can now be premised upon the widespread access to powerful mobile computing power, allied to high-speed interconnectedness of the web.  It’s at this point that the focus shifts from the development of better and faster access to the application of this technological power to our everyday lives.  In the not too distant future, our cars will drive (and park) themselves; computers will learn, and adapt to their environment as humans do; we may travel into space for a holiday; our medical professionals will have instant access to real time biomedical data and analysis of our vital signs. Pipe dreams some of these may be, but they indicate the scale of humanity’s creative potential in our present era. To take a more concrete example.  We are now starting to see the possibilities of this level of computing power applied to areas such as manufacturing, material science and so on – for example the development of “additive manufacturing”, otherwise known as 3-D printing.  For us, if the technology continues develop on its current trajectory, we do not think it an overstatement to suggest that we could be at the start of a second, computer-driven, Industrial Revolution that will radically alter not only the quality, speed of production and prevalence of highly customised goods but also how production itself is organised.  This has massive implications for the structure of our labour markets, the cost of production and so on. 2. Reduction in energy costs There is...

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Why James Bond would be an Ascendant Strategy client

Posted by on Dec 1, 2013 in 18 year real estate cycle, Kondratieff (Long) wave cycle |

I know what you’re thinking: what on earth would Ian Fleming’s super-spy and general all round hero have to do with Ascendant Strategy, a firm of independently-minded researchers with an expertise in economic cycles and a client base that consists, not of presidents and princes, but largely of investors and corporate directors? You’re probably answering this one for yourself: nothing to do with them. Actually, we think Cmdr James Bond CMG RN would be quite interested in what we have to say and would not be in the least surprised if he called us to sift through our intelligence. I will tell you why we think this. At Ascendant Strategy we research economic cycles and develop insights in ways that are of practical use to clients. One of the most important cycles we research is the Long Wave commodity cycle, sometimes known as the Kondratieff wave. This was first formally put forward by a Russian economist in the early 20th century, Nikolai Kondratieff, who observed that there were long cycles of development within capitalist economies, lasting around 50-60 years in total. Each wave consists of 20-25 years of rising, followed by 25-30 years of falling, commodity prices and interest rates. Kondratieff’s writings were influential in the West and were taken up by, among others, Joseph Schumpeter in the 1930s. Subsequent research points to several interesting insights about economic development based on this cycle, including the relationship between these long waves and levels of investment and therefore levels of employment, income and wealth generation; and new innovations, the application of which tends to come forward at the start of the cycle, often leading to a technological revolution that drives the cycle forward. In modern history, the dates of the Kondratieff Waves have been as follows: 1790-1810s (up) 1810s-1840s (down) – key innovating technologies:  The industrial machine and the dissemination of mass production 1840s-1870s, 1870s-1890s: Telegraph and railroads 1890s-1920s, 1920s-1940s: Telephone and the motor vehicle 1940s-1970s, 1970s- early 2000s: Electronics and consumer aviation Early 2000s-[2020s]:  The internet, big data and additive manufacturing Source: Kondratieff, Ascendant Strategy calculations and Phil Anderson It is difficult to date major economic and structural cycles like these precisely and so these dates are approximate. Indeed a number of commentators consider that the world is still in the downswing of the most recent long wave: at Ascendant Strategy we believe that the decade-long bull market in commodity prices during the 2000s to be a strong indication of the start of an upswing, with higher commodity prices to follow during the next 10-15 years. So why would James Bond be interested in any of this? As a user of extremely advanced technologies (remember the invisible car in the...

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