The 60-Second Guide To Everything You Need To Know About Oil, Gold, Bonds, China, And Stocks In 2010

marcfaber wondering tbi

We’ve all been hit with tons of 2010 forecasts over the last few months.While some forecasters aim to continue their winning streaks, others hope to salvage their reputations in 2010.

Yet from Goldman’s giant interest rate call to Marc Faber’s ultimate contrarian bet, competitive market forecasting is really just a giant game of chicken.

Key prognosticators are paid to take their stand, then defend it incessantly without blinking. So here they are.

The 60-second guide to 2010 predictions — >
(Note links are provided to each source in the pages)

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[slide
permalink=”interest-rates-goldman-the-fed-wont-raise-interest-rates-until-2012-1″
title=”Interest rates… Goldman: The Fed won’t raise interest rates until 2012!”
content=”Goldman’s huge counter-consensus call is that there won’t be any rate hikes next year, even the year after.

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permalink=”citi-greedy-investors-will-pour-into-junk-bonds-chasing-yield-2″
title=”Citi: Greedy investors will pour into junk bonds, chasing yield.”
content=”As Figure 13 indicates, on a percentage basis, retail flows in 2009 were less than 2003 and also a number of years in the nineties when the market was much smaller. The takeaway, in our view, is a repeat of the 2001-2003 period for high-yield mutual funds implies another $32 billion of inflows over 2010 and 2011.’

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permalink=”merill-bond-yields-will-finally-rise-in-the-face-of-government-irresponsibility-and-the-yuan-will-be-revalued-3″
title=”Merill: Bond yields will finally rise in the face of government irresponsibility… and the Yuan will be revalued.”
content=”‘The soaring U.S. budget deficit and a Chinese currency revaluation will drive 10-year U.S. Treasury yields above 4 per cent by year-end 2010. Shorter-duration Treasuries and U.S. investment-grade corporate credit are less susceptible to such risks.’

Read more here.
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permalink=”rbs-the-euro-currency-system-will-snap-as-its-underlying-economies-diverge-4″
title=”RBS: The Euro currency system will snap as its underlying economies diverge.”
content=”‘News of the death of the USD is greatly exaggerated. H2 2009’s neo-goldilocks has not been kind to the USD but as stated above this has a finite lifespan.

Paper currencies in general might not have a great 2010, but as we re-price liquidity, and re-price the higher beta that the Fed has (because of the inevitable higher beta of the US economy) then sunny and stormy scenarios alike might demand a rise in the USD.’

Source: RBSM: Andy’s World: 10 Things to Watch in 2010 newsletter

Read more here.
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permalink=”deutsche-bank-sovereign-debt-will-crack-in-many-places-5″
title=”Deutsche Bank: Sovereign debt will crack in many places.”
content=”Technically this is just one scenario Deutsche presents, but it’s the most interesting: ‘Under this scenario bond yields spike sharply higher. The mountain of debt issuance and the end of quantitative easing programs fail to bolster the necessary demand. Inflation becomes a growing concern and the potential for sovereign debt problems increase. This is the Julian Robertson higher rates scenario. Equities and bond both perform poorly.’

Read more here.
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permalink=”stocks-richard-bernstein-profits-will-explode-to-the-upside-6″
title=”Stocks… Richard Bernstein: Profits will explode to the upside.”
content=”‘Trailing four-quarter S&P 500 reported earnings growth could exceed 100%. Investors still seem to be under-estimating the operating and financial leverage that is built into corporate profits.’

Read more here.
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permalink=”morgan-stanley-stocks-will-trounce-bonds-7″
title=”Morgan Stanley: Stocks will trounce bonds.”
content=”‘Equities to outperform credit and government bonds (risk adjusted returns favour equities), but the path will be volatile. Expect an early growth scare to end the equity rally and for a short-term flow back to low risk assets. We remain positive on credit, but think equity-like returns are over given large normalization within the asset class.’

Read more here.

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permalink=”citi-fund-flows-will-pour-back-into-stocks-8″
title=”Citi: Fund flows will pour back into stocks.”
content=”‘Equity allocation seems light and may need some adjustment. In view of both mutual funds flows as well as equity and credit market rallies, it appears likely that investors remain underweight stocks and a reallocation seems probable especially in light of poor returns from alternatives.’

Read more here.
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permalink=”ubs-technology-staples-and-energy-will-outperform-9″
title=”UBS: Technology, staples, and energy will outperform.”
content=”‘We continue to see equity markets as fairly valued, noting that the rise in multiples reflects investor expectations for earnings recovery. However, we also see structural challenges limiting further multiple expansion. This balance suggests that gains in equity markets will need to be driven primarily by earnings growth. Despite modest GDP growth, both top-down and bottom-up estimates forecast a year of robust earnings growth in 2010. This growth, along with higher margins and strong balance sheet conditions, provides a solid backdrop for equity markets.’

Read more here.
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permalink=”morgan-stanley-regulatory-risk-will-slam-financials-10″
title=”Morgan Stanley: Regulatory risk will slam financials.”
content=”Many of the sector’s upside earnings surprise drivers are unlikely to get better in coming quarters, and expectations for pre-tax/pre-prevision earnings are not consistent with sub-par growth recovery. The sector faces regulatory risks, potential new capital adequacy requirements, and commercial real estate weakness. We like capital markets and prefer US to European/UK banks, but European insurers over US insurers.

Source: Morgan Stanley: Global Equity Strategy: The 2010 Global Outlook

Read more here.

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permalink=”goldman-economic-growth-will-wildly-diverge-around-the-world-11″
title=”Goldman: Economic growth will wildly diverge around the world.”
content=”The basic idea: bet on growth rates being wildly different all around the world.

Read more here.
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permalink=”jpmorgan-emerging-markets-will-melt-up-12″
title=”JPMorgan: Emerging markets will melt up.”
content=””EM equities should continue to outperform next year due to stronger growth and inflows. Our 2010 year-end forecast for MSCI EM is 1,300, an upside of 30% from current levels versus an expected 15% return for developed market equities.”‘

Read more here
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permalink=”roubini-did-i-mention-i-love-latin-america-13″
title=”Roubini: Did I mention I love Latin America?”
content=”‘These countries have shown their own resilience. Their economic policies have been sound and they’ve been able to conduct countercyclical policies. They’ve not experienced a financial crisis in these episodes. Their overall fundamentals are sound, so the combination of maintaining sound fundamentals and right economic policies with improvement in the global economic outlook implies a recovery.’

Read more here.
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permalink=”merrill-who-needs-the-american-consumer-profit-from-the-emerging-market-consumer-instead-14″
title=”Merrill: Who needs the American consumer? Profit from the emerging market consumer instead.”
content=”‘The emerging market consumer is at the beginning, not the end, of the credit cycle. Opportunities include emerging market currencies versus the U.S. dollar and, in equities, U.S. energy stocks, global energy majors and mega-cap multinationals.’

Read more here.
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[slide
permalink=”but-rosenberg-stocks-will-crash-and-i-will-finally-be-vindicated-15″
title=”But… Rosenberg: Stocks will crash and I will finally be vindicated!”
content=”‘We have characterised the rally in the economy and global equity markets appropriately as a bear market rally from the March lows, influenced by the heavy hand of government intervention and stimulus. But in classic Bob Farrell form, 2010 may well be seen as the year in which we witness the inevitable drawn out decline that is typical of secular bear markets.’

Read more here.
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permalink=”krugman-well-have-a-double-dip-recession-16″
title=”Krugman: We’ll have a double dip recession.”
content=”Unless of course you follow his government spending plans.

Read more here.
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[slide
permalink=”robert-prechter-my-wave-theory-says-take-your-money-off-the-table-and-run-but-the-dollar-will-soar-17″
title=”Robert Prechter: My wave theory says take your money off the table and run… but the dollar will soar.”
content=”‘I think it’s a great time for people who turn bullish in the first quarter to get out of the stock market… we’re now in territory where you need to think about lightening up stocks, even getting short. I think 2010 is going to be a big down year very much like 2008.’

Read more here
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[slide
permalink=”john-hussman-theres-an-80-chance-ill-be-right-again-18″
title=”John Hussman: There’s an 80% chance I’ll be right again.”
content=”‘In my estimation, there is still close to an 80% probability (Bayes’ Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we’ve observed in the equity market, labour market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle.’

Read more here.
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[slide
permalink=”eric-sprott-you-fools-the-bear-market-still-has-another-11-years-to-go-19″
title=”Eric Sprott: You fools, the bear market still has another 11 years to go.”
content=”‘”We’re in a bear market that will last 15 or 20 years, and we’ve had nine of them,” Sprott, chief executive officer of Sprott Asset Management LP, which oversees C$4.3 billion ($4.09 billion), said in an interview Dec. 18.’

Read more here.
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permalink=”faber-japan-is-the-ultimate-contrarian-play-20″
title=”Faber: Japan is the ultimate contrarian play.”
content=”‘You should buy Japanese stocks and Japanese banks this is the absolute contrarian play. Nobody is interested in Japan all the funds have withdrawn money from Japan they have given up on Japan I guarantee you the economy would not do well, forget about the economy the population is shrinking but you can have an economy that does not do well but the companies do well that is a big difference and I think the Japanese banks are very depressed. All the banks in Asia have actually recovered very strongly but not the Japanese banks so as a contrarian play I would look at that.’

-Marc Faber

Read more here.
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[slide
permalink=”commodities-morningstar-china-will-keep-devouring-massive-amounts-of-commodities-21″
title=”Commodities… Morningstar: China will keep devouring massive amounts of commodities.”
content=”In general, 2010 should award basic materials companies with stronger demand for their products, and cost-cutting measures should continue to drive profitability.

Read more here.”
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[slide
permalink=”doug-kass-gold-will-collapse-22″
title=”Doug Kass: Gold will collapse!”
content=”‘Gold’s price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.’

-Doug Kass @ RealMoney

Read more here.
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[slide
permalink=”merrill-commodity-prices-will-inflate-further-stay-long-gold-23″
title=”Merrill: Commodity prices will inflate further, stay long gold.”
content=”‘Supply constraints are likely to resurface in the year ahead as commodity demand outpaces the productive capacity of current resources. Investment opportunities include long positions in gold and global energy stocks.’

Read more here.
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[slide
permalink=”morgan-stanley-oil-prices-will-hold-their-ground-tightening-in-the-second-half-24″
title=”Morgan Stanley: Oil prices will hold their ground, tightening in the second half.”
content=”‘Our base case assumes that macro support for crude prices fades in 2010, as policymakers pull back the wave of liquidity that has been such a boon to oil bulls this year. We are sticking with our $85/bbl forecast for 2010.’

Read more here.
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[slide
permalink=”stratfor-but-huge-iraqi-oil-reserves-could-scare-opec-and-oil-markets-25″
title=”Stratfor: But huge Iraqi oil reserves could scare OPEC and oil markets.”
content=”The underlying logic behind OPEC is that Saudi Arabia gets an enormous share of the cartel’s oil quota because it gives up so much production to support oil prices. But with Iraqi oil projected to grow five fold in the next decade, the balance of production capacity will change dramatically. This will become increasingly evident during 2010.

Read more here.
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[slide
permalink=”morgan-stanley-short-the-commodity-currencies-26″
title=”Morgan Stanley: Short the commodity currencies.”
content=”‘BRL remains heavily overvalued against the USD: even if our models are somewhat slow to incorporate the improved fundamental outlook for the currency stemming from the recent oil finds and the China pull, an overvaluation of 34% against the USD suggests that BRL looks stretched at current levels. (The China pull argument may also apply to AUD.)’

Read more here.
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[slide
permalink=”optima-get-back-to-basics-just-buy-our-farm-fund-and-earn-us-fees-27″
title=”Optima: Get back to basics, just buy our farm fund and earn us fees.”
content=”Optima Fund is about to launch its first private equity vehicle. The new American Farmland Co. is now in talks to buy up land from farmers. Meanwhile, Farmland is a popular real inflation/disaster hedge among bearish gurus like Jim Rogers and Marc Faber.

Read more here.
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[slide
permalink=”so-pick-your-poison-28″
title=”So pick your poison.”
content=”We’re clearly blessed with a wide range of opinions, where even the smartest people end up routinely wrong. And the dumbest routinely right. That’s the beauty of markets.

See more details here:
Morgan Stanley’s 10 Top Trades For 2010 >>>
Goldman thinks 2010 will be a monster year >>>
JPMorgan’s 2010 calls >>>
Citi expects a 2010 bond unwind >>>
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