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Macroeconomics Discussion

A photo of goldmansachs goldmansachs
Hi SAF,

I have an interview coming up with Brookfield and a huge part of that has to do with knowing a lot about the markets.I was wondering where everyone's market views lie or their opinions on what's going on in the economy?

This could be a good learning experience as well for a lot of high school students.

1) Where do you think the prices of commodities are going specifically Gold/Silver?

2) What is going to happen to spiking oil prices?

3) Do you think Greece should default?

4) Your outlook on equity markets in the US/CAD?

5) Thoughts on GDP contraction in China and the effect it will have in the world economy?

6) Your view on AAPL is it a bubble or is that spiking 600 price reasonable based on valuations?

7) The US dollar and CAD dollar?
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2 replies
 
A photo of honourstudent101 honourstudent101

@goldmansachs wrote
Hi SAF,

I have an interview coming up with Brookfield and a huge part of that has to do with knowing a lot about the markets.I was wondering where everyone's market views lie or their opinions on what's going on in the economy?

This could be a good learning experience as well for a lot of high school students.

1) Where do you think the prices of commodities are going specifically Gold/Silver?

2) What is going to happen to spiking oil prices?

3) Do you think Greece should default?

4) Your outlook on equity markets in the US/CAD?

5) Thoughts on GDP contraction in China and the effect it will have in the world economy?

6) Your view on AAPL is it a bubble or is that spiking 600 price reasonable based on valuations?

7) The US dollar and CAD dollar?



I have only took grade 12 Econ so I try to answer to the best of my ability:

1) I still think they are going to continue to rise because of scarcity and rarity of those commodities and the high demands.

2)Based on Hubbert's peak there is only so much oil in each location so eventually there will be a shortage. In terms of oil prices increasing i believe that alternatives to oil will be used more commonly as well as new alternatives of transportation. However, since oil is an inelastic good it will take along time for people to change from oil. So therefore oil companies will be filthy rich (no pun intended).

3)Yes they should because it should not be the IMF and ECB responsibility to bail out Greece. Germany and other Euro countries are also starting to suffer for Greece mistakes. Greece should drop out of the Euro and try to rebuild that crap whole.

4) bad I guess, since not many trust the stock market every since the financial crisis.

5) Never knew that. If the GDP decrease then i guess China gain investment because standard of living decrease wages so more investments?

6) Apple stock increase will cause a bubble because of such high demand that it will be unreasonably high that people realize that and stop buying them, significantly dropping prices. (Bubble Burst)

7) Canadian dollar is growing very strong, despite interest rates staying low. However, with a potential Canadian housing bubble, the dollar might lose value but not significant value (like US) because of stricter banking regulations in Canada.
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A photo of kiddinaround kiddinaround

@goldmansachs wrote
Hi SAF,

I have an interview coming up with Brookfield and a huge part of that has to do with knowing a lot about the markets.I was wondering where everyone's market views lie or their opinions on what's going on in the economy?

This could be a good learning experience as well for a lot of high school students.

1) Where do you think the prices of commodities are going specifically Gold/Silver?

2) What is going to happen to spiking oil prices?

3) Do you think Greece should default?

4) Your outlook on equity markets in the US/CAD?

5) Thoughts on GDP contraction in China and the effect it will have in the world economy?

6) Your view on AAPL is it a bubble or is that spiking 600 price reasonable based on valuations?

7) The US dollar and CAD dollar?



1) Screw gold. No seriously. The whole inflation protection thing is a load of crap. Gold is a bad investment. You can't eat it. It doesn't pay a dividend. It won't create value in any way. We are currently seeing the gold correction as we speak. Gold is extremely over valued. There is a reason mining stocks are still sitting at gold ~$1100. There are better, much lower risk options in puting your money to work.

2) Emerging market demand will keep oil prices high. Unrest in the middle east will keep shocks continuing. Is oil overpriced at current levels? In my opinion yes, but not by much. $100 oil is here to stay, that's the reality of it. As long as we see continued growth in emerging markets, oil demand will only go up, even with declines in the US. I don't see the US ever producing enough oil to drive prices back down to the $60s. The oil sands need at least ~$75 a barrel anyway to be profitable.

3) Depends what you classify as a default. I think Debt restructuing is the answer. A "controlled default" so to speak. The real question is, is it sustainable for Greece to remain in the Euro Zone.

4) It's a bull market now. Anyone who is sitting back trying to call the "great pending crash" will be on the side lines for a long time. The labour markets are the biggest problem, and they are improving. Household debt and other consumer risks only pose issues in the longer term, not so much the short term. I'm long banks, insurance, some tech, big box consumer staples, and energy. I'm short precious metals, crap internet stocks (ESPECIALLY GROUPON, THEY HAVE NEVER MADE MONEY), and bonds. Especially US Treasuries. Dow 15000.

5) I think you mean GDP growth contraction. Well, it's pretty obvious that China would not be able to sustain double digit growth. But this isn't necassarily a bad thing. China is now in the early-moderate stages of a manufacturing economy and their crrent 7.5% GDP growth is very healthy for this stage. The government is easing restrictions on small to medium size businesses, and I think in the coming years it will be likely we will see a middle class in China. If China starts importing as well (which is already happening), this is good news for the world economy as a whole.

6) A good article in The Economist this week on Apple. Don't look at the price per share so much as the market cap. The reality is, %50 growth we have seen in Apple's share price is not sustainable. And Apple is over valued for the amount of revenue it earns. Put this in perspective. Apple with a market cap of $550 billion give or take earned $108 billion in Revenue in 2011. Exxon, with a market cap of ~$450 billion, earned $486 billion in Revenue in 2011. Is apple over valued? I would say Exxon is more undervalued than anything. Apple's growth is unsustainable. What will make it an attractive stock for the coming years will be its dividends, especially if they increase.

7) The Canadian/Petro dollar will continue to rise against the US dollar as long as we see positive numbers coming out of the US. Past data will show the Canadian dollar is around 70% correlated with US indexes (some globe and mail article a month back). As long as we don't see a recession in the US in the short term, (which we won't), the Canadian dollar will likely trade around the $1.04 range, with $.05 fluctuations each way. High oil prices will keep the Canadian Dollar above parity.


Best of luck on your Brookfield interview. Don't be afraid to speak your mind on your economic views, as long as you have some logic to them. Don't go out there and start calling the apocalypse like you're straight off of zerohedge. It is frowned upon.
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