Trends: The ascension of the Chinese, Indian, Russian and Brazilian middle class, the economic rebirth of Europe, the world baby-boomer binge, the rise of fundamentalist Islam and radical Islamic terrorism, carbon-emission management, the new oil/energy age 2008-2015, mega-technology, and the $2.5 trillion sovereign wealth fund.
Tobin Smith of ChangeWave Investing lists eight global trends at MSN Money. Excerpts below.
Link: Tobin Smith Journal.
...the most powerful transformations in the global economy:
1. The ascension of the Chinese, Indian, Russian and Brazilian middle class. This is the most powerful transformative, mega-secular macroeconomic event, with roughly 75-100 million new active consumers coming into the world economy yearly. Trillions of dollars of new consumption is turning export-based economies into consumer economies, a world first. The U.S. is only 20% of the world's GDP now, and falling. That's good -- because the pie is getting bigger for all.
2. The economic rebirth of Europe. The birth of U.S.-style capitalism, corporate governance and election of pro-capitalism leadership in Germany, Central Europe and even FRANCE!
3. The world baby-boomer binge. The world's 225 million baby boomers are hitting their PEAK earnings and wealth accumulation period from 2008 to 2015.
4. The rise of fundamentalist Islam and radical Islamic terrorism. Hundreds of millions of human beings now live in Islamic nonsecular countries under nonsecular governments.
5. Carbon-emission management. The adoption in Europe, Japan, Canada, California (more to come) of carbon-emission controls and credits.
6. The new oil/energy age 2008-2015: For the first time, global GDP growth rates exceed North American GDP growth. As a result of the mega-bump in economic consumption and wealth accumulation, the amount of excess supply of light, sweet crude (the only oil that 90% of refiners can refine) is dropping from 3% excess to 1.5% or less in the next few years.
Since light, sweet crude prices are determined by the degree of excess capacity in the daily market (the less excess supply, the higher the bid price for spot market oil), prices are in a brand new range -- $55 at the low end, $75 at the high end -- for the next decade at least.
Clearly the cheap oil outside of state-owned oil companies has been found. The 70% of reserves that reside inside non-Western territory are compromised by the lack of technological and capital investment capacity inside these largely inefficient and fundamentalist regimes.
Oil shocks will take us to $100 oil -- recessions will take us to $55. Oil-consumption-growth worldwide of 2.2% a year through 2015, with a 1% reduction in oil production from all OPEC and non-OPEC oil producers with the exception of Canada (from oil sands), will keep light sweet crude prices north of $65 and higher for the next decade.
But oil is a worldwide commodity that is priced in direct correlation to daily excess capacity. OPEC/Saudi Arabia is now back in control of oil prices, and they will continue to withhold 5% or so of their production to keep the excess capacity tight.
7. Mega-technology. Welcome the Worldwide Broadband Internet. Worldwide rollout of third-generation wireless networks and DSL hit the tipping point in the early 21st century. The new rollout of fourth-generation wireless broadband (over 100-megabit speeds) heralds the new age of the Internet.
8. The $2.5 trillion sovereign wealth fund. Sovereign wealth funds -- the cash being put aside by exchange-reserve positive countries from Norway to China -- have now hit $2.5 trillion and are growing by 10% per year. This amount of liquidity looking for a home drives U.S. interest rates lower and equity prices higher.