Thursday, 8 January 2009

Forecasts for 2009

2009 Forecasts:
1) UK houseprices will fall by a futher 15% in 2009: i) valuations remain high on a rental yield or a p/e ration (especially as we haven't seen a significant rise in unemployment yet). (conviction: 10/10)
2) Gold will break through $700: i) gold remains high relative to crude oil on a historical basis ii) gold has failed to rally and react to middle east instability as it has in the past iii) what worse news financially are we going to see in the next year?
3) SPX will trade through 1400: i) valuations based on averages of long terms eps, (excluding the financials) show the a significant cheapness ii) Rates are at zero, QE should reduce risk premiums and provide easier credit and narrow the valuation discount iii) mutual funds and hedge funds have cash and have been bearish, fatigued?
4) Liverpool will not win the Premiership.
5) Australia will retain the ashes.
6) EUR/GBP will trade through parity (perhaps through 1.1) then trade back to 0.9 as Europe lags during the recovery.
7) Gordon Brown will call an election (I think the poll will be before the end of June), the Conservatives will win with a margin of ~80 seat majority, the Lib Dems will lose seats.
8) USD/JPY will rally significantly, there is no way that the BOJ will raise rates this year. I expect the USA to lead the market rally as they've been consistently further along the curve than the rest of the world.

9) Oil will not break $55 for the first 6months of the year.
10) the VIX won't trade above 65 this year.

Stock Picks:
Long: TSCO, CVX, small in GS
Short: CSCO, small in JPM
watching closely: MSFT, WMT

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