Recession in 2017 — Yes or No?

Green Road Sign - Recession Ahead

If you think recession is coming in 2017, I happen to think you’re wrong.

I use the real estate cycle knowledge to judge this opinion.

Here’s what I mean by that.

Here is the real estate clock that I developed years ago to help me gauge the turning of the cycle. The real estate cycle turns, well, like clockwork.


Phil Anderson’s Cycles, Trends and Forecasts
[Click to enlarge]

Since 1800 in the US, every single cycle has developed in the order on that clock. I prove this in my book, The Secret Life of Real Estate and Banking.

We date the clock on the Cycles, Trends and Forecasts website, of course. Then, you just keep an eye on the news, an eye on the charts, and put it all together. Like this for example…

UK house prices climbed to a record last month. A slowdown in London sales was offset by a stronger market in the north of the country.

House prices are at records all around the world, as you’d expect for this time in the cycle.

UK share indices are at all-time highs. European shares are also trying to get into ‘all-time new highs’ territory.

Here’s the STOXX Europe 600 Index by way of example.


Source: Optuma
[Click to enlarge]

It’s very close again to those past tops. Should the index break back into all-time new highs, which appears imminent, it tells you that the EU will move into a period of higher economic growth.

This is not an opinion. It is what the charts are telling you.

A similar thing is happening in Asian bourses. The Singapore Index hit a 21-month peak this month, powered mainly by the bank and real estate sectors.

When a stock market breaks into all-time new highs, it is telling you that the nation involved is seeing higher earnings. Always view this in terms of where we are in the real estate cycle, as determined by the real estate clock based on the US.

The earlier a market breaks into all-time new highs within the cycle, the more bullish it is for the cycle.

Here’s a chart of the Dow. But I’ve ended the chart at 2013.


Source: Optuma
[Click to enlarge]

The US markets broke into all-time new highs during 2013.

I said at the time — and this is available to you on record as a Cycles, Trends and Forecasts subscriber – that because the Dow and other US markets were moving higher, it suggested the US was about to start a serious economic recovery, and then go into boom conditions.

If you didn’t know that then, you need to learn how to read that clock.

The same now is true of the EU and many other Asian nations.

This will push the US economy into 11 o’clock on my real estate clock. And then we’ll be due for recession — maybe.

I say ‘maybe’ because there is just so much happening in the world.

China’s internal economy is now becoming so large with surplus capacity that it’s going to have to find more overseas markets. This is, in my view, what’s underpinning the ‘One Belt, One Road’ China initiative. So much has been written about that project that we won’t add to it here.

Indian Prime Minister Narendra Modi has just recently outlined a plan to modernise 400 of the roughly 8,000 train stations around the country. And those 400 are just the beginning.

New Delhi Railway Station is where they’re starting. They’re going to spend 100 billion rupees — that’s US$1.49 billion — for a new building, shops, separate arrival and departure halls, lounges and spacious lobbies.

Now in India, that’s something I’d like to see.

Japan is going to build and operate some bullet trains for them as well. Very fast, modern trains.

Russia is about to install bullet trains too. They’ll be put on the Moscow-Kazan line by the year 2020.

The rail line is about 800 kilometres long and runs through seven different Russian regions, with a population of some 25 million people. Each stop along that line is now that much closer to Moscow.

The bullet trains are coming from China.

Can you imagine what could happen if the US really ramps up its infrastructure spending? It means more construction, more building…

and large increases in land value.

And this all helps to keep companies very busy right around the world.

For example, Indonesia’s largest cement producer, Semen Indonesia, has just earmarked six trillion rupiahs — US$449 million — in 2017 to finance expansion, so the company can meet the Indonesian government’s demands for nationwide infrastructure development.

Included in the Semen Indonesia plan is a further outlay to increase production in the two plants already under construction. Packaging plants and wasting power plants are also to be built.

Indonesia’s total infrastructure bill is estimated by the government to cost 5.5 quadrillion rupiahs over the next decade. This encapsulates 225 projects in 13 sectors. Railroads and toll roads have especially been listed as strategic national projects.

It dwarfs anything Australia has planned.

And it will create significant land speculation in all the new areas involved.

This tells you a lot about what’s going on in the world. And it doesn’t say ‘collapse is coming’.

Earlier, I showed you my real estate clock.

Subscribers to my service get the real estate clock dated for them of course. They already know the year to watch for likely recession around the world — maybe.

We worked that out years ago. But they’re now focused on creating their own wealth, rather than waiting for the next recession, if indeed if actually happens. It certainly won’t happen this year.

Go here if you’d like to find out more about how to determine that.

Regards,

Phil Anderson,
For Markets & Money

Publisher’s note: Above, Phil discusses how the real estate cycle affects US, UK, European and Asian markets, and how it ties in with government infrastructure spending. But what about us down here in Australia? With so much fiery debate in the media surrounding Aussie housing, imagine if you had an ‘almanac’ that could tell you when you should buy or sell.

If the possibility intrigues you, or if you have any money in Australian real estate, you need to hear more about Phil’s research here.

Phillip Anderson

Phillip Anderson

Phillip J Anderson is an Australian academic, author and student of stock, commodity and real estate cycles. Drawing on the work of British economist Fred Harrison and American technical analyst WD Gann, Phil developed his own theory about 18-year real estate cycles in the early 1990s.

Since then, Phil has been using cycle theory to guide his own investment decisions — crediting the phenomenon with his decision to move to a 100% cash position in July of 2007, just before the GFC wreaked havoc on the Australian stock market.

He has also built up a lucrative property portfolio here and in the UK. Phil is currently predicting a 14-year boom in Australian house prices.

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Denis Ross
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The link between infrastructure spending and property development and real estate prices is fairly well established and known. However, infrastructure creation usually is done by governments using tax revenues, alone or in public-private partnerships. It is unusual for governments to insist that private investors provide their own infrastructure to service their investments, as for example with the Adani coal mine investment planned for central Queensland where the investors have to build a railway line from the interior to Abbot Point coal port terminal on the coast. Obviously where investment is already assured, building infrastructure could be profitable long term investments… Read more »
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