2015 Predictions - a collection of major firms' predictions

Afternoon Monkeys,

I find this time of year fascinating, as economists, investors, and talking heads all hurl out prognostications about what the world is going to do in 2015. Some are very specific and grab headlines, others are broader so they run a smaller risk of being wrong.

I think most of them are bullshit but nevertheless I think it's interesting to see what supposedly the best investors have to say. I wanted to list a few of the people I pay attention to and hear your thoughts.

Goldman calling for nearly 3.5% global GDP, lower oil, continued USD strength, and rising rates

Bill Gross is calling for the end of the bull market (again)

Bob Doll making his 10 predictions again...my favorite are his political ones. I've met him, helluva nice guy, but "wide open?" what does that even mean?

Gundlach is doom & gloom yet again

Shocker, Barron's is bullish, but this article has an infographic with all of the major strategists' predictions

UBS says we'll have a vague Fed and is talking about coal (what? not oil?)

Morgan Stanley is slightly less bullish (maybe because it's not Adam Parker writing) calling for no rate increase, slow growth, deeper recessions in Russia & Brazil, and stock outperformance

Tobias Levkovich, one of my favorites, disagrees with the prevailing thesis and calls for large cap over small cap

GMO is bearish again, they've been sucking it up the past couple of years with equity calls, but notably, they've lowered their forecast

Hussman, one of the few bears I actually enjoy, has been pounding the table for a few years (along with John Mauldin)

The Guru, Byron Wein, calls for cyberterrorism, a good market for high yield, and a bad year for Japan

What do you all think is going to happen in 2015?

Cheers,

Brofessor

 

Bob Doll & Byron Wein are good about this, they review their 10 predictions and then grade themselves. Have a look at theirs. I remember MS called for S&P 2014 at year end 2014 and they were a little off (not bullish enough), but can't speak to the rest of them.

It was John Kenneth Galbraith who said "The only function of economic forecasting is to make astrology look respectable," I tend to agree with that.

 
Easy C:

The most accurate forecast's don't come from a big firm. Here's what Princeton Economics intl. (not the university) has to say about 2015. Short version: they're predicting a bond bubble popping.

http://armstrongeconomics.com/2015/01/06/the-bond-...

I like the stuff that Austrian economists are spitting out, but I don't know that I would bet my hat on it. Just be cautious with this prediction. Armstrong should work on that website. Some of those charts look like they were drawn in crayon by my kids.
"Decide what to be and go be it." - The Avett Brothers
 

Honestly, as has been so for a long time. Cyber terrorism and Cyber crime will keep increasing. There is a big market for proactive, and non-passive cyber defense companies and services. The education system still leaves out programming and basic computer knowledge out of the classroom. It's not impressive that kids know how to use technology from a young age. Kids should be taught how it runs. What is the code that make A cause Y. If we start when they are young it would benefit them and overall society. Sure, more bad people can learn it too, but at least it will bring to the forefront the reality of things, and make it more known. The key thing is starting young because programming is something you learn by experience and the more you have the better you are...

 

I'm going long property in 2015. Taking the day off tomorrow to look at apartments in the upper west side.

Those who can, do. Those who can't, post threads about how to do it on WSO.
 
Best Response

A friend of mine is a genius and he works for something like the CIA or NSA (haven't been able to figure it out) as a global analyst. He's been right about interest rates for years. He's been saying rates will remain persistently low for the foreseeable future, basically because the Fed has inadvertently created a new normal and it will not be politically viable for them to raise rates, especially when there isn't particularly bad downward pressure on the dollar or high inflation.

On this issue, he's been correct over and over and over again. I was a naysayer in 2014, telling him a year ago that higher rates were virtually certain. Well, the Fed has barely pulled back bond buying and rates have continued to tumble, although this has admittedly been somewhat attached to geopolitics.

So we'll see who is right--Goldman Sachs analysts or the CIA analyst. I'm leaning toward the CIA guy because I think global unrest will keep global investors returning to safety.

 

Maybe I missed it but isn't Wall Street losing their shit over these plummeting oil prices?! Under $50 a barrel now... I N S A N E E E ! Is it really from an over supply or is someone trying to fuck over Putin and Russia for political purposes? I just really feel like these oil price drops should be a major discussion?! Am I alone on this? Or crazy? :P

Also - interesting note on the CIA/NSA friend... the Fed reserve is so corrupt is comical at this point. lol I def don't see them jacking up rates for a while. They've been this low for what, 6 ish yrs? It's true about the new normal... and they don't want to rock the boat (which will eventually happen with the next crash - student loans, tech industry or real estate).

 

we just published our quarterly note and we addressed this, basically the rumor is (and I buy it) that Saudi Arabia is deliberately oversupplying the market for 2 reasons: to punish the N. American shale/fracking boom, the other is to punish Russia & Iran for supporting Assad. I don't think what the Saudis are doing is rational, but the fact of the matter is their breakevens are among the lowest in the world so they're basically sticking it to the rest of the world.

until they turn the spigot off, I'm not optimistic over a rally in oil, but I desperately hope for one because we're overweight energy.

 
thebrofessor:

we just published our quarterly note and we addressed this, basically the rumor is (and I buy it) that Saudi Arabia is deliberately oversupplying the market for 2 reasons: to punish the N. American shale/fracking boom, the other is to punish Russia & Iran for supporting Assad. I don't think what the Saudis are doing is rational, but the fact of the matter is their breakevens are among the lowest in the world so they're basically sticking it to the rest of the world.

until they turn the spigot off, I'm not optimistic over a rally in oil, but I desperately hope for one because we're overweight energy.

I hate Obama as much as the next heterosexual, patriotic, liberty-loving capitalist American male, but I was wondering to my co-worker if Obama/Obama's administration might have been pulling the strings behind the scenes with Saudi Arabia (and others?) to put pressure on Russia (and possibly Iran). If so, it's a brilliant strategy and I'd have to reluctantly give Obama mad propers for that. My co-worker dismissed the thought, stating that there's no one in Obama's cabinet who is smart enough to consider--let alone pull off--such a task. I guess time will tell.

I honestly think that because of Russia's less-than-progressive position on gay rights, it has mobilized some support among Obama's left flank to take on Russia. I think if you take away that wedge issue Obama would have abandoned Ukraine to the wolves a year ago. And my hypothesis (theory? I'm not a scientist!) is that this motivation to act against Russia prompted the Obama administration to find creative, quiet ways to take Russia on without utilizing physical weapons. Perhaps the Obama administration is pulling some strings, or the CIA is threatening to expose some Saudi prince for his [name the offense]. This, this is why we spy (and is among the many reasons I'm not a libertarian).

 

Yes I did read about that same Saudi theory... makes sense. And apparently the Saudi's have so much in reserves, that they can take the hit of breaking even or losing on oil for a while just to stick it to which ever country (countries?!) they are trying to f over... There is def a lot we don't know going on behind the scenes. I do think Obama has his hand in this fiasco... I don't love the guy either but this strategy is genius. It's all just so juicy mean while so many people are just so happy to see $2/gal for gas... they aren't even questioning where/why/how this is happening?! Ugh people. And I just read an article that Russia's economy is getting hit so hard that Putin lowered the price of Vodka so all the poor, suppressed Russians could cope a little better.... lol That's not funny, but it is. And then the news on oil tycoon billionaire Harold Hamm losing like $10 billion in just a few months because the price of fuel has halved.... CRAZY! Not even going to get into that $975mill check his now ex-wife finally accepted and cashed in their recent divorce. Been a rough 6 months for the billionaire :( Anyway, I'll stop hijacking this thread and go check out the quarterly note. :)

 

There has been a lot crazy activity lately but I feel the following: U.S.: Stronger Dollar, Fed Rate hike around mid-year due to lower inflation and decreasing unemployment. Keep your eyes open for the Senate to vote on the exporting of US produced oil however there are enough reserves until late 2016. This will not ease the price of oil.

Latin America: Venezuela will default even with China's $20B subsidized loan, Brazil will have slow growth but get into serious debt as they continue to build infrastructure for the 2016 Olympics, Don't get me started on Argentina. They are all shades of 8UP. Cuba is an interesting case that will start to take shape.

Europe: England will gain while the rest of the mainland turns into a political battle ground, Increased terrorist threat due to returning ISIS fighters, Greece will stay in the EU otherwise the dike will open. We always have to remember that even with an EU all of the countries are independent and will look to secure their own positions.

India: Moderate growth with new economic policies.

Russia: Recession starts and forces them to the negotiating table but the Putin rhetoric will not let them admit defeat.

China: The housing bubble will continue to be hidden until it's too late in the year. Once this starts an internal political movement will begin to rise causing even greater havoc.

Japan: Significant demographic problem that will not help in their current position.

The Saudi theory is a good one but I would not believe that the current administration thought of that. The Saudi's are totally independent and are pissed at Russia as stated earlier.

Cyberterrorism is an interesting topic as the attacks have become more sophisticated. I think people would have waken up when the NASDAQ was hacked in 2011.

Si Vis Pacem Para Bellum
 

Also the Reagan administration (along with the CIA) is widely credited with adopting a similar anti-Russia strategy with the Saudis in mid 1980s. So it's not like Obama administration invented the tactic, it's already in the playbook.

 

I don't think the White House or anyone else is "making" the Saudis keep the spigot on, they need to wipe out the Frackers to remain relevant. Choppy but slightly higher US stocks overall, led by biotech and large caps.

More M&A particularly in the pharma/biotech sector.

Last year I was certain just like everyone else that the Fed was going to raise rates, now I'm leaning towards them not being able to raise mainly because of Europe. The long end of the curve is going to remain low/probably go lower because of relative yields in Europe and Japan, even if Europe improves and returns to growth they will still keep rates low a while. The Fed spent most of the last year/year and a half trying to raise rates on the short end of the curve through open market operations to obviously no avail because there is so much forced buying.

The plethora of pension funds and asset managers etc. who have a mandatory bond allocation are going to keep crushing yields, meanwhile banks have little incentive to take risk because of the low net interest margins which further begets low rates due to low inflation and velocity of money.

In my opinion U.S. rates are 100% based on the growth rates in Europe right now because of these factors, everything else being the same if Europe was growing at ~1.5-3% the U.S. could raise rates to "normal" levels without the dollar wrecking EM and commodity producers. The irony is that our GDP is only 13% based on exports, I'm not sure what portion of that goes to Europe but our rates are certainly almost completely based off of their GDP.

 

Interesting reads, especially the variety of opinions across the spectrum. Agreed, it would also be v interesting to see how these peeps faired in2014

Strength & Honour Lads pass exams
 

my recollection:

Goldman was wrong in a lot of areas Morgan was right on stocks, wrong on rates GMO & Bill Gross were wrong on bear market Gundlach was right on rates

on Wein and Doll you can read their scorecards, they both went north of 50% correct

here's a caveat to all of this: most banks will talk their books. it pays to be bullish on stocks and bearing on bonds (net interest margin anyone?). keep this in mind.

 

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