Gold, Oil, and the Wimpy Dollar
Gold has reached a record high and will probably move even higher before settling back. Oil has finally reached
the $100 per barrel mark…but the rise isn’t over yet. The oil industry is so delicate that any geopolitical crisis
could have a major impact on production and distribution. And even without a crisis, demand for oil is still high
in the US…and is growing every day in burgeoning countries like China and India. We see oil prices reaching
$115 per barrel – and gasoline hitting $4 per gallon at the pump this summer.
The US Dollar has gotten pummeled in the last year against other foreign currencies, but during 2008, the Dollar
should bottom out and see a slight rebound.
Housing – Deal or No Deal?
Mortgage Market
Home prices dropped between 5 – 10% in 2007, but there was no “bubble”. 2008 will be another down year for
housing with similar declines in prices – but will also mark a bottoming out. The thing of it is…you can’t see a
FORCAST
bottom until you are already past it, much like how we always see refinance activity pick up when rates start ris-
2008
ing from their lowest levels!
By Bryan Johnson 2008 will see great deals for housing and real estate. Rising incomes and lower home prices will make real estate
This article was first published in Jan 2008 and we are re-running it
Stock Market for 2008. A 5 – 10% drop appears to be
more affordable, as some of the excesses are washed out. Now more than ever, make sure you stay in touch with
to compare our forecast vs. actual for year to date in 2008.
in the cards. But that will be nothing compared to the
your client database and referral partners to educate them on what’s happening, and how the present market
bubble that will burst in the Chinese Stock Market, up
We’re not sure if we are happier
creates opportunities for them.
97% last year, and more than 350% for the past two
about 2008 being here… or that the
years…the Chinese Stock Market is due for a drop.
Drum Roll Please…
historical events of 2007 have finally come to a close.
Mortgage Rates for 2008 will be…volatile. We see a much wider range than in the past few years, with sharp
Our stock pick for this year is FXP ($76), which is a
One thing is for sure – 2008 promises to be exciting,
moves and intra-day repricing becoming commonplace.
double short on China…but not for the faint of heart.
full of changes, and most of all…volatile. We humbly
In 2007, we correctly forecast the range to be from 5.875 – 6.625%, which was narrower than the range in 2006.
hope our forecast for 2008 will help give you an edge
One Hand Tied Behind Their Back
But this year, 30-Year Zero point Conforming loans will likely touch a bottom near 5.5%, and approach a spike
in the year ahead.
Typically, the Fed fights off a recession with rate cuts
near 7%. As inflation creeps in, 2008 will see a slightly higher sweet spot than 2007, somewhere around 6.25%.
Looking back, we are very proud of our previous years
– and while rate cuts help the economy, they can also
forecasts, and hope that our accurate track record can
But one important development for rates in 2008 will be the rebirth of Adjustable Rate Mortgages – the old fashioned
spark higher inflation. And we believe inflation is actu-
remain intact.
kind. 3 and 5-Year ARM’s will benefit from the Fed Rate cuts…and so will you, especially those in Jumbo markets.
ally a much bigger problem than most out there realize.
Economy: Hot or Not?
The new hawkish makeup of the Fed’s voting mem-
Success in 2008
Fed Chairman Big Ben Bernanke says we will not have
bers means the Fed remains concerned about inflation
For everyone, 2008 will be exactly what you make of it. If you listen to the media and the whiners, it will be a
a recession in 2008 – but we feel there is a 75% chance
too – but is now in the difficult position of fighting off
tough year. But if you look for the opportunities, 2008 will provide you with enormous opportunity.
that there will indeed be a recession. Remember, the
the potential of a recession with one hand tied behind
The coming year will be full of changes and volatility…but remember that whoever says it can’t be done, is gen-
textbook definition of a recession is two consecutive
their back…as they will be restricted in the amount of
erally interrupted by someone doing it. It can be done. Don’t let anyone stop you from making this a great year.
quarters of negative GDP growth.
their stimulating rate cuts, by the inflation those cuts
We at the MLS Store appreciate you – our family of members and future customers – and we will keep doing our
will inevitably exacerbate.
The health of any economy is often judged by its Stock
part to help keep you informed and advised every step of the way during 2008.
Market…and while we had correctly forecast the up-
While many people see a Fed Funds Rate in the low
side moves of the past two years, we now see a lower
2’s, we see it landing around 3.25%.
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