A new year means it’s prediction time again. Every man, woman and their dog is making lists of forecasts for 2010.
But who’s really worth listening to?
One name that fast springs to mind is Byron Wein. For 18 years he was part of Morgan Stanley’s star strategy team along with Wall Street guru Barton Biggs. (It’s well worth reading Jody Clarke’s interview with Barton last month).
Mr Wein is now vice-chairman of Blackstone Advisory Services. And a year ago he made some pretty good calls. For 2009, he forecast a big rally in the S&P index (correct), a surge in the gold price to $1,200 (it got there), $80 oil (right again), 4% US Treasury yields (they got to 3.95%), American house prices bottoming out (they have for now) and 7%+ growth in China (bang on once more).
So what does the market veteran think 2010 could hold? Here are seven ‘surprises’ that he thinks have a 50%+ chance of happening this year.
• a stronger-than-expected economic US recovery
• Fed funds – the benchmark US rate, now 0.15% – at 2% by year-end
• Treasury yields climbing to 5.5% as US debt soars
• the S&P hitting 1,300, plunging to 1,000, then bouncing to 1,130 (as now)
• a big dollar rally
• Japan’s Nikkei index (currently around 10,700) hitting 12,000
• President Obama endorsing nuclear power as an alternative to coal
We’d agree that interest rates are set to rise; we like Japan; and we’ve being saying for a while that the dollar’s due for a rebound. But maybe the most interesting comment is the last on the list. We’re also keen on nuclear power, as we wrote about last month in the magazine. And our tip for the top was US-based construction firm Shaw Group (NYSE: SHAW).