10 Surprises for 2009

WESTPORT, Conn. - (Business Wire) Byron R. Wien, Chief Investment Strategist of Pequot Capital Management, Inc., today issued his list of Ten Surprises for 2009. Mr. Wien has issued his economic, financial market and political surprises annually since 1986. The 2009 list follows: 1. The Standard and Poor’s 500 rises to 1200. In anticipation of a second-half recovery in the U.S. economy, the market improves from a base of investor despondency and hedge fund and mutual fund withdrawals. The mantra changes from “fortunes have been lost” to “fortunes can still be made.” Higher quality corporate bonds, leveraged loans and mortgages lead the way. 2. Gold rises to $1,200 per ounce. Heavy buying by Middle Eastern investors and a worldwide disenchantment with paper currencies drive the price of precious metals higher. In a time of uncertainty, investors want something they can count on as real. 3. The price of oil returns to $80 per barrel. Production disappointments and rising Asian demand create an unfavorable supply/demand balance. Other commodities also rise, some doubling from their 2008 lows. Natural gas goes to $9 per mcf. 4. Low Treasury interest rates coupled with huge borrowing by the Treasury send the dollar into a serious downward slide. Overseas investors become concerned that the currency printing presses will never stop. The yen goes to 75 and the euro to 1.65. 5. The ten-year U.S. Treasury yield climbs to 4%. Later in the year, as the economy shows signs of recovery, economists and investors shift their mood from concern about deflation to worries about inflation. A weak dollar, rapid growth in money supply and record-setting deficits (over $1 trillion) are behind the change. 6. China’s growth exceeds 7% and its stock market revives. World leaders credit China’s authoritarian government for its thoughtful stimulus policies and effective execution during a challenging period. The Chinese consumer begins to spend more and save less and this shift is behind the unexpected strength in the economy. 7. Falling tax revenues from the financial sector cause New York State to threaten bankruptcy and other states and municipalities follow. The Federal government is forced to step in and provide substantial assistance. The New York Post screams “When will the bailouts stop?” 8. Housing starts reach bottom ahead of schedule in the fall, and house prices stabilize after dropping 15% from year-end 2008 levels. The Obama stimulus program proves effective and a slow growth recovery begins before year-end. Third and fourth quarter real gross domestic product numbers are positive. 9. The savings rate in the United States fails to improve beyond 3%, as most economists expect. The concept of thrift seems to have vanished from American culture. Peak job insecurity and negative growth drive increased savings early in the year, but spending resumes as the economic growth turns positive in the second half, making Christmas 2009 the best ever. 10. Citing concerns about Iraq’s fragile democratically elected government and the danger of a Taliban-controlled Afghanistan, Barack Obama slows his plan for troop withdrawal in the former and meaningfully increases U.S. military presence in the latter. In a hawkish speech he states that the threat of terrorism forces the United States to maintain a strong military force in this strategic area. Mr. Wien believes these surprises, which the consensus would assign only a one-in-three chance of happening, have at least a 50% probability of occurring at some point during the year. In previous years, more than half of the elements of the list have proven correct. Pequot Capital Management is a private investment firm.

This guy is very sunny!:woohoo: Expect Dow 11,000 on \'Obama Bounce\': Investor CNBC.com | 08 Jan 2009 | 08:52 AM ET Dow Jones Industrial Average could rally to 11,000 in the short term as optimism over incoming President Barack Obama boosts investors’ confidence, Clem Chambers, CEO of ADVFN, told CNBC. “I think we can see the Dow between 10,000 and 11,000 in relatively short order, but whatever happens going forward I think we’re going to have a strong year this year,” Chambers said. However, the stock market will remain highly volatile throughout the year, warns Chambers. “It’s going to be incredibly turbulent, there’s going to be lots and lots of volatility, but we’re going to get an Obama bounce,” he said. “The new president is going to put a lot of optimism into people and help turn the tide,” he added. Toward the end of the year Chambers said he is expecting a correction back down toward 10,000 points on the Dow, but there will be “no long-term, clear trend for two or three years,” he said. There is a “universe of stocks to pick right now,\" Chambers added. He is currently building a portfolio of both “mad, crazy stocks that could go bust tomorrow” and “really good companies that have just been hammered down with the whole index.”

Views by Nouriel Roubini, Prof at NYU-Stern School of Business in a Jan 27 Bloomberg interview on the US economy: \"Collapse in consumption, housing, credit and capital spending\" \"US banking system technically insolvent\" \"at least US$1.4 trillion of new capital required to bring US banks back to safe lending capability\" \"Nationalization of banks the only appropriate soln. Can resell them to the private sector after 2-3 years (like Sweden).\" \"otherwise stagnation may last for decades like in Japan\" \"recession not a normal business inventory cycle but a deleveraging like Japan\"

Some of these ten surprises are a joke! Which is probably why they are surprises... The Biggest Surprise to Me in 2009, will be Singapore Ministers and MPs take a pay cut to share the burden with the fellow Singaporeans... Fat chance of that happening. :laugh: :laugh:

The way the US government is printing money, I think GOLD can hit USD 1,500 very soon.

I salute Byron Wien - Many of the 10 surprises he set out in Jan 09 have turned out to be very accurate. No time to check out all, except the following: a) S&P is now 1115. (he said 1200) b) Gold is now US$1,100 (he said 1200) c) oil is now US$77 (he said 80) d) china\'s growth >8% (he said 7%). dont forget his forecasts were made when prices were very far from his targets.