12 Dec Synchronicity

Synchronicity

Synchronicity is a concept first elucidated by Carl Jung which means literally that events are “meaningful coincidences” if they occur with no causal relationship yet seem to be meaningfully related.

Causality (cause and effect) is the connection between the first process (the cause) with the second (the effect), where the first is partly responsible for the second, and the second is partly dependent on the first.

Jung’s concept of synchronicity is based on the idea that the individual, through the unconscious, has access to an “absolute knowledge” which is not bound by the limitations of space or time. Jung’s primary source of material for this hypothesis was to be found in his study of dreams especially those which were of a parapsychological nature

Synchronicity is also the last LP (yes those black round things that spin around) by English rock band the Police. It is their most most successful LP ever and won 3 Grammy awards & included hit singles “Every Breath You Take” (my opinion their best song ever & if you listen to John Waite’s “Missing You” you will hear a similar tune), “King of Pain”, “Wrapped Around Your Finger”, and “Synchronicity II”. The album’s title and much of the material for the songs were inspired by Arthur Koestler’s Book – The Roots of Coincidence. This book was influenced by the work of Carl Jung. It is ironic because at the time of recording the band members couldn’t stand one another and recorded their bits in separate rooms & there was allegedly a punchup between Sting & Stewart Copeland – so much for “synchronicity”.

A connecting principle, Linked to the invisible Almost imperceptible
Something inexpressible. Science insusceptible Logic so inflexible
Causally connectible Yet nothing is invincible.

What is Richie rambling on about music, psychology & synchronicity here for – you might well ask. Well World Economic Growth (GDP) is synchronized for the first time for ages. All the major parts of the world are growing together at the same time. Growing economies means that business will be growing profits which is good for investment markets as a general rule.

With one breath, with one flow You will know Synchronicity
A sleep trance, a dream dance, A shared romance, Synchronicity

The latest Economic Outlook published by the OECD in Paris said growth is accelerating in China, USA, Japan, Europe and even many emerging economies. The OECD is projecting global GDP growth to be between 3.5 per cent and 3.75 per cent through to 2019. This is realty good news as the world has been at various times running on 1 – 2 cylinders over the past 15 years, dependant on either US or China for growth. Now that you have all major parts of the world growing at the same time
If you act, as you think, The missing link, Synchronicity.

Traditionally upswings in global growth has lead to inflation rearing it’s ugly head as workers shift jobs & demand higher rates of pay. This just hasn’t been happening recently due to competition, the rise of the internet and recently technological advances. The recent US job numbers showed jobs coming in ahead of forecasts but wage increases below forecasts. Remember it is only 10 years since Apple launched their first IPhone & the majority of the developed world could now not live without one. Old style businesses are being exposed by these changes (called “disruption”). I would prefer to call it innovation as disruption has been going on ever since the day Man discovered fire and was able to cook and also heat things.

We know you, they know me Extrasensory Synchronicity.

Now on top of this you can add in Trump’s tax cuts with the corporate rate expected to be reduced to 20% or 22% (from 35%) and the allowance of immediate expensing of capital expenditure for tax purposes for businesses. The House & the Senate in the USA have agreed to pass these cuts and they are only debating the minutiae of the deal – expect the cuts to be passed by Xmas. The US Treasury has measured the effect of the tax cuts as being worth a net $300 bn to the US economy over the next 10 years. The tax cuts will put more money in more ordinary American’s pockets & also corporates. The tax benefits being given to large corporates to bring back $USD home and given concessional tax rates is also expected to provide a boost – for example Apple is expected to get a $47 Bn tax benefit from bringing cash home after introduction of the new rules.

A star fall, a phone call, It joins all, Synchronicity.

On top of this Trump is also expected to announce an infrastructure spending package – maybe by Xmas, but more likely in the new year. More spending on infrastructure will create more jobs & could be beneficial for Australia given that coal & iron ore are still our 2 biggest exports.

What are the downsides – interest rates ?. The US Federal Reserve & the ECB have telegraphed what their intentions are. The US Fed is expected to increase their cash rate to 1.5% at their December meeting (and probably a couple of times more in 2018) and the ECB is expected to reduce the amount of European Government Bonds over the next year. This will take some “juice” out of the financial system globally, but isn’t considered to be a game changer at this stage.

It’s so deep, it’s so wide Your inside Synchronicity.

What about Australia you might well ask. Nationally GDP was 2.8% in the September quarter, with rebound in corporate spending & also government spending holding up. Consumer spending (retail sales) was however low. What about interest rates you ask – well at present they still appear to be on hold but the next move may be up (but who knows when ?)

Effect without a cause Sub-atomic laws, scientific pause Synchronicity

So in summary 2017 has been an excellent year for investment markets and we look forward with optimism to 2018.

Wishing everyone a Merry Xmas & a prosperous New Year and looking forward to catching up with you in 2018.