Where Are Global-Macro Forecasts Off?


After the big sell-off in gold and commodities generally, it is time to evaluate the state of the biggest global-macro driven markets.  There is clearly a shift in thinking sweeping over these markets this week.

Let’s look into the following consensus global-macro forecasts for FX, Energy, Base Metals, and Precious Metals. 

From consensus outlooks on these four groups --all partly driven by global GDP growth-- we can get a sense of what’s brewing inside global GDP growth too. 

Each prediction typed in below is drawn up in terms of a 12 to 15 month future outlook. 

FX - In terms of the U.S. dollar (USD), 2013-14 FX consensus outlooks show us a rich set of stories. 

USD weaker against strong Asia-Pacific countries: India, China.
USD strength coming against overvalued commodity currencies: Australia, Brazil, and Russia. 
A move back to USD/CAD parity seen with Canada. 
Volatility in Euroland. Fresh lows for UK pound.  Central bank intervention in Switzerland.
Weak Japan Yen - Abenomics -- it may be overdone for now.

Energy -  Prices to be seen in June 2014.

WTI Crude: $95 a barrel 
Gasoline at the Pump: $3.82 a gallon
Natural Gas: $3.95 per MMBtu, up +18% y/y

Base Metals -  The consensus sees the following patterns playing out to the end of June 2014.

Copper prices falling (-2.43% CAGR from spot), from $8,076 per metric ton to $7,831.

Tin prices down (-4.06%)
Lead prices down (-2.81%)

Aluminum prices rising (+4.00%)
Nickel prices rising (+1.26%) .

Precious Metals -  This one is a tough sell at this point!

After the big sell-off, consensus forecasts for gold from mid April 2013 to end June 2014 sees a potential +21.76% CAGR from spot, from $1360 to around $1656.

Consensus for silver calls for a market, with +30.40% appreciation potential by the end of June 2014.            

Platinum and palladium consensus sees appreciation potential of +14.74% and +14.28%, respectively.

After such a massive sell-off, led by gold, a ripe debate exists on where to find value.

My Real Time Insight question for you today--

(1) What part of the consensus global-macro do you MOST disagree with?  Why? 
(2) Importantly, what investment comes to mind to exploit global-macro driven markets?


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