How did you start the New Year?
We started ours by eating ‘lucky grapes’. Well, our second New Year’s celebration that is.
You see, every year we get two separate starts to the year.
The first one happens at midnight, Australian time. Here we gather with friends and family in Australia to celebrate and watch the fireworks.
Then, just before 10am on New Year’s day, we get to do it all over again as we video chat with family in Spain.
They in turn, tune in the TV to Puerta del Sol.
You may have heard the phrase ‘All roads lead to Rome’. In Spain, all roads start in Madrid, specifically, in Puerta del Sol (gate of the sun in Spanish). Puerta del Sol is kilometre zero for all roads in the country’s road system.
It is also smack in the middle of the city. It’s near major transport, the King’s palace and shopping.
Puerta del Sol is also a place for gatherings.
Towering over the plaza, there is the clock tower. And this is the place where many Spanish choose to welcome the New Year.
Every year, hours before the stroke of midnight on 31 December, people gather below the clock to hear the 12 bells ringing in the New Year.
Around the country, families gather around the TV to watch as the clock strikes 12.
And that’s where the lucky grapes come in. According to tradition, anyone eating grapes at midnight will have a successful year.
For each time the clock’s bell tolls, you eat a grape. Each grape represents a month in the new year and is supposed to bring good luck.
Yep, the first thing the Spanish do on New Year’s is eat grapes.
It is an old tradition.
So how did it all start?
Well, no one is really sure.
One theory is that back in 1880s the Spanish aristocracy started celebrating the new year with private parties. For this, they imported the French tradition of drinking champagne complementing it with grapes.
The popular classes then adopted the same tradition as a way to protest and mock them.
Another explanation is that in 1909, grape growers had an excellent crop…which left them with excess stock. To get rid of it, they launched a massive marketing campaign relating grapes to Christmas and them bringing luck in the new year.
Which one is right? Who knows. If we had to guess it would be the second one.
With each grape you eat, you also get a wish. That is 12 wishes that include goals, resolutions and expectations for the new year.
To be honest, we are not a big believer in New Year’s resolutions.
For one, we don’t think much changes when 31 December turns into 1 January.
While we may be full of hope and good intentions for the new year, we notice we are quick to fall into old habits. Most people seem to have forgotten their new year’s resolutions by February. That’s why we try to make our big changes happen during the year.
For another, our expectations for the new year are usually based on what happened in the previous year.
It is very human to take the present and project it into the future. To think that the future will be very similar and linear to the recent present. Something called ‘recency bias’.
What should we expect in 2019 for the markets?
So what should we expect for this year?
We honestly don’t know.
2018 started off with a bang for the markets.
But if recent events are anything to go by, then markets are in turmoil.
Wall Street has had one of its worst years in about 10 years with volatility making a come back.
The US Fed has been increasing interest rates and taking liquidity out of the system. So far, the US economy is faring well and unemployment is low. The thing is, we don’t believe employment figures accurately tell the whole employment story.
Everywhere there is talk and fear of a global recession. We have been warning about one for a long time…we are certainly due for one.
Then again, we could be falling into the trap of our own recency bias.
With recent sentiment souring, we could see some changes in risk taking. Which in turn could put off the slowdown for a while.
But, it could be too late.
As we wrote, things don’t reset to zero at midnight. We are still towing excesses from the previous years and large amounts of debt.
And, as we find out every new year, old habits die hard.
We recovered from the 2008 crisis not by creating growth, but by taking on more debt.
Since then, we haven’t changed much, and don’t expect the new year will bring significant change in this regard. Things could already be too far gone.
We have seen a lot of stimulus since 2008.
There have been low interest rates and a 2018 tax cut for the US. With the US Fed increasing rates and central banks ending stimulus, two questions come to mind.
Where will the fuel for the economy come from in 2019?
And, will grapes bring us luck in 2019? We certainly need it.
Editor, Markets & Money
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