Predictions For 2012

2012 is almost here and I, like everyone else, “must” make my predictions for next year. Looking over my 2011 predictions, I had some solid and not-so-solid calls. Some of the good calls included:

  • Almost getting the $SPX top right (I called for 1375-1400). Actual high was ~1370.
  • I called for the dollar to disscorrelate with the market (bad call), BUT I did call the dollar to finish the year up 2-3%. As of today, the dollar stands at +1%. Given that so many people were calling for the death of the dollar, I think this is a pretty solid call.
  • I did call for commodities to continue to go up (but did not specify where they would finish).
  • I called for stagnation in 2011. We saw a lot of that this year.
Some Bad calls included:
  • I called for a correction no bigger than 9%. THAT was wrong.
  • I called for emerging markets to outperform, but as we saw, they got hit hard.
  • I called for energy stocks to outperform and “slow” stocks to lag. This was wrong as energy is basically flat YTD and Utilities and Consumer Staples are up big.
My $TWELVE 2012 predictions

Remember, these are mere predictions, not recommendations. I will try to make these more specific than last year.

 

  1. The market ($SPX) will rally twice during the year (in about ~2 month increments). Once early in 2012, and once late in the year. In the other monts, we will see sell-offs and range trading (similar to what we have now). “Sell in May, Go away” will also be true again in 2012. The low of the year will be 1155.00 ($SPX). The High will be 1415.
  2. Bonds ($TLT) will remain strong for most of 2012 despite market rallies. The 10 year yield high will be 2.61. The 10 year low will be 1.39.
  3. WTI Oil ($USO) will trade in a range from $80-$112. I have seen calls for oil ($CL_F) to spike way above $115 because of Iranian fears, but I just do not see that happening. Brent/Crude spread will remain on average at ~$10 for the year. Commodities that are sensitive to oil prices will follow oil’s movement, and those that are not sensitive (like cotton) will continue to get hit.
  4. Gold ($GLD) will do nothing for 2012. By nothing I mean it will just be in a big range between 1250-1800. And yes, I am calling for gold to fall below 1,300 (will finish year around 1450).  Silver will see a low of $15 (will finish year around $20). Platinum will once again trade at at a premium to Gold. Copper will fall to 2.35 and set a high of 3.35 and finish the year off somewhere around 3.00.
  5. The Dollar ($USDX) will see strength throughout most of the year. The high for the Dollar Index will be ~90.00. The dollar will finish the year up 5%. The Euro ($EURUSD) will see a low of 1.05 and close the year around 1.20.
  6. There will be NO QE3 (or NGDP targeting). This is a very bold prediction, but I stand 100% behind it. The $FED realizes we are in a balance-sheet recession, so they know injecting liquidity (via QE) will do no good and will actually do harm to the recovery by increasing speculation in risk-assets. Rates will stay at 0%.
  7. Housing prices ($XHB) will bottom very late in the year (November ish). By bottom I mean we will see major cities print 0% Y/Y instead of negatives with 2-3 bright spots printing + Y/Y. America WILL show spurts of growth. I do not expect robust growth whatsover, as I expect us to still be in a balance-sheet recession until at least 2013. But expect to see better GDP growth numbers.
  8. China ($FXE) will SLOW down. This will be the biggest threat to worldwide growth. Specific Emerging markets will be mixed. Those that are very China-dependent, will get hit. Malaysia ($EWM) will  grow the biggest in 2012 from the Asian Countries not named China/India.
  9. Europe will fall into a recession/deflation as austerity hits their economies hard (but we do not see massive defaults. Africa will thrive (as Robert Sinn noted). Australia will see stagnation as high demand for commodities drops. 
  10. Obama will win the 2012 election as he beats Romney in a very close contest. Obama gets the nod as America shows signs of growth and as Unemployment drops to 8.3% in October of 2012. Democrats win the Senate by 1 seat. Republicans remain in control of the house, but don’t see much change from 2011.
  11. Stocks: $AAPL will hit $500, before reversing back down to the mid-300s. $EBAY will have a strong year. I expect $EBAY to hit the high 40s. $GOOG will hit all-time highs. $NFLX will hit 40, only to reverse and hit $100 later in the year. $BBY loses more market share to $AMZN and other online retailers.. The Financial Sector continues to be a drag on the market and underperform. Tech outperforms the market. Big name brand names (like $NKE, $MCD, $SBUX) continue outperform. Safe plays like Utilities will neither over or under perform. Energy names mostly underperform.
  12. Stocktwits & Twitter will continue to grow, get bigger and more influential. MMT grows more influential as more people realize mainstream economics are filled with erroneous assumptions/theories. The #GetMoneyOut campaign gains more momentum. I Fly out to NY, Chi, and Miami in the summer to meet up with other traders/twitterers.
Have a great New Years everyone! Be safe and see you in 2012! Hopefully I am 12/12 when I revisit these predictions on Dec 30, 2012.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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