It's important to analyse the track record of the "market economists". Many don't have a true understanding of how the economy works. While the academic institutions are to take some blame along with employers, it is up to the economist to realise their mistakes and change their model. Unfortunately, many don't change and this blog post will highlight their flawed predictions.
For most traders and money managers, being correct is not as important because it's not the probability that matters but the expected value/payoff of the outcome that matters. Many of those listed below do not manage money and it is only accurate forecasts which will prove their reliability.
The forecasts and predictions below are over the medium to long-term. A one month forecast offers little value. However, if one can correctly forecast a year or two out, then their views are extremely valuable.
Last updated: 29th October 2015
If you have a submission to add to the list then send me a tweet (@ShervinD) or reply in the comments section below.
Click on prediction to be taken to evidence of their forecast. The economists/forecasters are listed in alphabetical order by last name but it may be faster to use your browser's Find tool (CTRL + F):
Annette Bleacher (TD Securities)
Albert Edwards (SocGen)
Steen Jakobsen (Saxo Group)
Chris Joye
David Lewellyan-Smith [DLS] and Leith van Onselen [LvO] (Macrobusiness)
Michael McCarthy (CMC Markets)
This guy is a joke. When I did follow him, he was attributing daily market moves to whatever piece of news he thought moved the market. Obviously many do this but you would expect someone who claims to be knowledgeable about the markets to be more cautious and less certain. Unless he actually knows nothing about markets...
For most traders and money managers, being correct is not as important because it's not the probability that matters but the expected value/payoff of the outcome that matters. Many of those listed below do not manage money and it is only accurate forecasts which will prove their reliability.
The forecasts and predictions below are over the medium to long-term. A one month forecast offers little value. However, if one can correctly forecast a year or two out, then their views are extremely valuable.
Last updated: 29th October 2015
If you have a submission to add to the list then send me a tweet (@ShervinD) or reply in the comments section below.
Click on prediction to be taken to evidence of their forecast. The economists/forecasters are listed in alphabetical order by last name but it may be faster to use your browser's Find tool (CTRL + F):
Annette Bleacher (TD Securities)
- In May 2014, "the case for holding the cash rate at record low levels [2.50%] is no longer there". FALSE. RBA's next move was a rate cut in February 2015 to 2.25%
- In March 2015, called a surprise "pause" in RBA rate cuts due to the increased risk higher property prices on the financial system
- In July 2014, "We expecting this to continue and iron ore prices to head above $100 a ton in the near future" FALSE
- In April 2015, he "expects the Reserve Bank to hike interest rates next year [2016]"
- In March 2015: "Growth is sufficient to see the unemployment rate drop"
- April 2015: "the greater probability is that the real house price boom hasn't even started... there really is no medium-term threat to house price growth."
- May 2015: "We have a sudden boost to confidence.. and the apparent end of the RBA's easing cycle"
- May 2015: "Fears of a slump in the gold price appear to have abated as more investors turn to the yellow mental to preserve their wealth"
Ambrose Evans-Pritchard
- In August 2015: "Prepare for sub-1% 10y US Treasury yields and another financial crisis"
- In October 2014, "We are forecasting that the iron ore price has bottomed out. We anticipate a lift of around 15% in the price by year's end... we are not anticipating a rate hike from the RBA until August next year" FALSE
Steen Jakobsen (Saxo Group)
Chris Joye
- In September 2015, "Property prices will stay well supported... this boom will continue for some time yet."
- In October 2015, he reiterated his forecast that interest rates will remain unchanged for the next year. "Rate cuts are clearly off the agenda for now".
- In September 2015, "Australia is unlikely to witness further rate cuts.. the non-mining areas of the economy were performing solidly...there was no economic case to cut rates below 2% but the end of 2015"
David Lewellyan-Smith [DLS] and Leith van Onselen [LvO] (Macrobusiness)
- Called iron ore prices below $50 TRUE
- Called the AUD/USD below 0.65 by year end [end of 2015].
- In February 2015 when talking about iron ore prices, "...if $35 does come in the next 18 months, that is the end of the great Australian housing bubble"
- In April 2015, RBA "rates will be cut to 1%"
- May 2015 DLS, "By 2018 I expect rates to be at 0.75% and possibly lower if the world is mad enough."
- May 2015 LvO, "the [Australian housing market] correction will manifest on the back of rising unemployment caused by: falling mining investment between now and 2017; Closure of the car industry in 2016 (Ford) and 2017 (Holden and Toyota); and Falling housing-related employment as the market turns south in 2016; There is also the possibility of an external shock adding to the decline"
- May 2015 DLS, "13.5% unemployment, 30-50% crash in house prices, 5% fall in GDP" - behind a paywall but verified by Bullion Baron.
- September 2015 DLS, "The Aussie dollar is going to fall so much further (well under 50 cents) as the commodity shakeout enters its denouement..."
Michael McCarthy (CMC Markets)
- In December 2014, "I would expect at least stabilisation around these lower levels [$US68/t] and eventually over the first quarter move back towards $US80/t..." FALSE
This guy is a joke. When I did follow him, he was attributing daily market moves to whatever piece of news he thought moved the market. Obviously many do this but you would expect someone who claims to be knowledgeable about the markets to be more cautious and less certain. Unless he actually knows nothing about markets...
- In 2014, called housing prices to rise TRUE
- March 2014, "RBA to hike in May" and "the RBA decision to hike is a no-brainer and one that should be implemented very soon" FALSE
- Called a bottom in the AUD/USD at 0.7600 FALSE
- In April 2015, "we are close to reaching the low point in the economic cycle... get set for betting [sic] news in the second half of 2015 and with that, a sea-change in market conditions"
- In April 2014, "It is increasingly likely that we have seen the peak in the unemployment rate in the current cycle" [6.4% in Jan 2015]
- In May 2015, "Economy is doing fine - the deficit will be smaller..."
- August 2015. "Clearly the RBA is not going to be cutting again"
- September 2015, "House prices are set to fall. New housing starts vs population suggest that we are about to enter a period of excess supply."
- October 2015, "Australia is not heading for a recession"
- November 2015, referring to interest rates: "Next move is up"
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