By: GZ on Mercoledì 28 Dicembre 2005 15:37
Per fine anno in america c'è la tradizione di pubblicare le "Sorprese dell'Anno Nuovo" cioè una lista di eventi che possono sorprendere i mercati
Ecco quelle di Douk Kass di TSC, uno dei migliori (ribassista)
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Here is the first part of my list of 25 possible surprises in 2006:
1. Anti-American rhetoric in South and Central America becomes kinetic in 2006 and has broad market and economic implications. A plethora of left-wing presidents (creating another anathema to the Bush administration) are elected in this volatile and important economic area of the world as elections of leaders in nine countries from Nicaragua to Chile are staged next year. Most importantly, with the recent election of Evo Morales in Bolivia, a projected victory of anti-American Nicaraguan leader Daniel Ortega, a surprisingly easy victory in Mexico of Andres Manuel Loez Obrador (an anti-President Vincente Fox candidate) coupled with more aggressive nationalistic moves by Venezuela's Hugo Chavez turn into an epidemic of anti-American policy. This new wave of socialism and left-wing presidents contributes to a series of moves to nationalize certain industries, and supply disruptions in certain countries in South America are destabilizing, resulting in much higher commodity prices during the year (including oil, natural gas, copper, tin and grain). The CRB Index approaches 375 (now at 326). Fears of stagflation befall economies and markets dependent on imports of goods from South America like the U.S. Crude climbs to over $80/barrel, and the Dow Jones Industrial Average bottoms at 9000-9250 during the early summer (and closes the year at the 10,000 level). Gold trades above $675/ounce sometime during the year.
2. Senate Judiciary Committee hearings on secret domestic wiretaps authorized by President Bush -- made without applying for a warrant from the court that handles sensitive national security issues -- find that the surveillance operation was far broader than admitted by the Administration. A special prosecutor begins an aggressive assault on the White House that results in Vice President Richard Cheney taking the fall for the Administration and resigning by midyear. The President's popularity plunges as memories of Watergate are resurrected and the Democratic party takes a large lead in preliminary Presidential polls. Condoleezza Rice is selected to replace Cheney as vice president.
3. The Federal Reserve, responding to the appearance of continued economic strength in fourth quarter 2005 and in January 2006, continues to take the federal funds rate higher, just as the economy is about to sour. Bernanke pushes for and proceeds with a 50-basis-point increase in his first meeting as chairman of the Fed. (It turns out to be the last rate change over the balance of 2006.) As the Fed and ECB continue tightening and the BOJ ends its easing, bond yields initially rise early in 2006, but in the second half of the year, the 10-year U.S. note's yield dips to 3.65% as the market's focus moves toward potential rate cuts by the Fed and a potential recession in late 2006, early 2007.
4. By early second quarter 2006, the consumption binge of the last decade comes to an abrupt halt. Retail sales turn negative as the American consumer (the straw that has stirred the drink of the world economies) folds like a cheap suit and several former high-flying specialty retailers -- such as Abercrombie & Fitch (ANF), Williams-Sonoma (WSM), Urban Outfitters (URBN) and so forth -- exhibit surprisingly poor same-store sales. Weakness in personal consumption is exacerbated by many of the external shocks discussed in this piece: rising commodity prices, lower home prices (leading to weakening job creation and the lost ability to extract equity), stretched affordability of the first-time and repeat home buyer to purchase a new home, the absence of personal savings (and a safety net), rising higher debt service requirements (proliferation and reset of floating-rate and interest-only loans), changes in credit card payment requirements, etc.
5. Though none are major, there are a number of small-scale terrorist acts in the U.S. However, a failed attempt to contaminate a major region of the U.S.'s water supply serves to exacerbate already high agricultural product prices (in large measure reflecting South America's instability) to record levels creating another inflationary scare.
6. After the 50-basis-point increase in the fed funds rate, stocks drop abruptly (and then quickly rally back) after an uneventful January. However, the conspicuous slowdown in retail sales hits equities again, and stocks only recover half of those losses. The rise in commodity prices and the CRB Index (impacted by political unrest in South and Central America and a ramp in agricultural prices caused by a terrorist act) bring the DJIA down to the 9000-9250 level in early summer, where it settles in for the balance of the year, though another sharp year-end rally brings the DJIA back to about 10,000 by New Year. Volatility during this period rises dramatically as the S&P 500 Index routinely has 2% daily moves, acting more like a commodity than a stock index. Mutual fund inflows drop precipitously.
7. With confidence in the markets and economies deteriorating, merger and acquisition activity suddenly slows to a crawl. One large private equity firm returns over $5 billion to its investors.
8. 2006's best performing equity strategy is short selling; the worst is aggressive growth (long-only). The junk bond market records its worst performance in over a decade and underperforms almost every asset class in 2006. The cable stocks, old media and high yielding stocks (like regional bell operating companies) are among the best sectors next year. General Motors (GM) muddles through and ends the year with a gain of 25% (leading all other components of the Dow Jones Industrial Average) after Steve Miller (with financial assistance and the managerial support of Wilbur Ross) takes over the helm in a broad management shakeup. Coca-Cola (KO) is a close second (buoyed by more stock purchases by Warren Buffett), and Verizon (VZ) is the third-best performing member of that index. On the downside, the popularity of the exchanges (Chicago Mercantile, International Securities Exchange, Nasdaq Stock Market Inc., Chicago Board of Trade, etc.) wanes, and the stocks lead most sectors to the downside in 2006.
9. Corporate profits for 2006 are flat, decelerating sharply from the 7% increase recorded in first quarter 2006.
10. The U.S. dollar's strong momentum and new paradigm bullishness in 2005 yields to weakness in 2006. As trade tensions mount with China (which in turn fails to ante up on its continued financing of U.S. consumption), inflation abruptly rises (within the context of supply disruptions), and the focus comes back to the U.S. current account deficit (reaching $900 billion or 6.9% of GDP in 2006) and a stagnating economy as a consequence of reduced confidence in the presidency. The surge in tax revenues, which produced a reduction in the federal deficit, is reversed as tax revenue growth normalizes back toward that of nominal GDP subsequent to the record breaking upswing in 2005. Contributing to an eroding deficit are the Medicare prescription drug plan, spending on unmet infrastructure needs, the Homeland Investment Act (which encouraged repatriation of foreign profits to be taxed at low rates), hurricane rebuilding efforts, a pickup in bonuses (and other nonstandard income) and the normalization of individual nonwithheld and corporate taxes (both having previously benefited from a rising stock market and an increase in the value of homes, which served to increase capital gain realizations).
11. 2006 brings upon two large-scale Long Term Capital-like failures (but not in U.S.-based institutions) -- two in Asia and one in Europe -- precipitated by an astonishingly large derivative loss that two major U.S. and several overseas money center banks are partially on the hook for.
12. A computer hacker launches a successful attack on a widely used open-source application of the Internet (which extends into closed, proprietary sites) causing chaos and turmoil over a month-long period at Amazon (AMZN), Google (GOOG), eBay (EBAY), Yahoo! (YHOO), AOL and many other sites. The Internet Holders Index drops by 20% in two weeks.
13. Google (GOOG) faces numerous legal and competitive challenges in 2006. Its leadership in search is threatened not by Microsoft (MSFT) or Yahoo!, but by a cadre of high-profile engineers within the company itself who embark on their own search mission. The new competitive player is taken public by Goldman Sachs (GS) and has an instant valuation in excess of $25 billion after its IPO. Google's shares briefly touch $200/share during the year as competition among the older and the new entities intensifies. Further hurting Google will be an attempt by the Federal Communications Commission to extend the definition of decency laws to the Internet and a series of adverse court rulings in the Google Book Search case, in a patent issue that is brought up in the courts by content providers and in a major privacy scandal involving the U.S. government. Most importantly, a suit is instituted that claims Google has become a Web monopoly and is violating U.S. antitrust law. Microsoft's Vista product is more successful than most expect. It experiences a surprising gain of 10 points of search share after hiring two senior Google engineers who introduce massive changes to the product, like eliminating clutter from its homepage. A high-profile, content-rich media company will make available a free video product, hurting the launch of Google Video. Finally, Google will release far fewer services this year, disappointing investors, as the company realizes it must go through a consolidation phase in which it makes its existing services scale better.
14. Apple (AAPL) (and its iTunes) will not be immune from the problems facing Google as the music industry decides on new ways to control its distribution, just like in the good old days. In other Internet happenings: TiVo (TIVO) and NetFlix (NFLX) will merge and the China Internet Bubble will deflate.
15. Amidst the market's gloom and doom, Warren Buffett goes on a buying spree (which emphasizes acquisitions in old media and the real estate industry). Berkshire Hathaway (BRKa) acquires Dow Jones & Company (DJ) after a proxy contest is instituted by some of the younger members of the Bancroft family. Buffett further expands his involvement in the real estate sector after buying Countrywide Credit and a troubled publicly held substandard mortgage originator