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Doug Kass Predicts 2010's Big Colored Swans And Turkeys
A list which contains both some quite interesting swans and turkeys:
1. There is a glaring upside to first-quarter 2010 corporate profits (up 100% year over year) and first-quarter 2010 GDP (up 4.5%). It grows clear that, owing to continued draconian cost cuts, coupled with a series of positive economic releases and a long list of company profit guidance increases in mid to late January and early February, there is a very large upside to first-quarter GDP (up 4.5%) and, even more important, to S&P profit growth (which doubles!). The upside on both counts is in sharp contrast to more muted growth expectations. While corporate managers, economists and strategists raise earnings per share, full-year growth and S&P target estimates, surprisingly, the U.S. equity market fails to respond positively to the much better growth dynamic, and the S&P 500 remains tightly range-bound (between 1,050 and 1,150) into spring 2010.
2. Housing and jobs fail to revive. An outsized first-quarter 2010 GDP (up 4.5.%) print is achieved despite a still moribund housing market and without any meaningful improvement in the labor market (excluding the increase in census workers) as corporations continue to cut costs and show little commitment to adding permanent employees.
3. The U.S. dollar explodes higher. After dropping by over 40% from 2001 to 2008, the U.S. dollar continued to spiral lower in the last nine months of 2009. Our currency's recent strength will persist, however, surprising most market participants by continuing to rally into first quarter 2010. In fact, the U.S. dollar will be the strongest major world currency during the first three or four months of the new year.
4. The price of gold topples. Gold's price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.
5. Central banks tighten earlier than expected. China, facing reported inflation approaching 5%, tightens monetary and fiscal policy in March, a month ahead of a Fed tightening of 50 basis points, which, with the benefit of hindsight, is a policy mistake.
6. A Middle East peace is upended due to an attack by Israel on Iran. Israel attacks Iran's nuclear facilities before midyear. An already comatose U.S. consumer falls back on its heels, retail spending plummets, and the personal savings rate approaches 10%. The first-quarter spike in domestic growth is short-lived as GDP abruptly stalls.
7. Stocks drop by 10% in the first half of next year. In the face of renewed geopolitical tensions and reduced worldwide growth expectations, stocks drop as the threat of an economic double-dip grows. Surprisingly, though, the drop in the major indices is contained, and the U.S. stock market retreats by less than 10% from year-end 2009 levels.
8. Goldman Sachs goes private. Goldman Sachs (GS) stock drops back to $125 to $130 a share, within $15 of the warrant exercise price that Warren Buffett received in Berkshire Hathaway's (BRK.A) late 2008 investment in Goldman Sachs. Sick of the unrelenting compensation outcry, government jawboning and associated populist pressures, Warren Buffett teams up with Goldman Sachs to take the investment firm private. The deal is completed by year-end.
9. Second-half 2010 GDP growth turns flat. The Goldman Sachs transaction stabilizes the markets, which are stunned by an extended Mideast conflict that continues throughout the summer and into the early fall. While a diplomatic initiative led by the U.S. serves to calm Mideast tensions, flat second-half U.S. GDP growth and a still high 9.5% to 10.0% unemployment rate caps the U.S. stock market's upside and leads to a very dull second half, during which share prices have virtually flatlined (with surprisingly limited rallies and corrections throughout the entire six-month period). For the full year, the S&P 500 exhibits a 10% decline vs. the general consensus of leading strategists for about a 10% rise in the major indices.
10. Rate-sensitive stocks outperform; metals underperform. Utilities are the best performing sector in the U.S. stock market in 2010; gold stocks are the worst performing group, with consumer discretionary coming in as a close second.
11. Treasury yields fall. The yield of the 10-year U.S. note drops from 4% at the end of the first quarter to under 3% by the summer and ends the year at approximately the same level (3%). Despite the current consensus that higher inflation and interest rates will weigh on the fixed-income markets, bonds surprisingly outperform stocks in 2010. A plethora of specialized domestic and non-U.S. fixed-income exchange-traded funds are introduced throughout the year, setting the stage for a vast speculative top in bond prices, but that is a late 2011 issue.
12. Warren Buffett steps down. Warren Buffett announces that he is handing over the investment reins to a Berkshire outsider and that he plans to also announce his in-house successor as chief operating officer by Berkshire Hathaway annual meeting in 2011.
13. Insider trading charges expand. The SEC alleges, in a broad-ranging sting, the existence of extensive exchange of information that goes well beyond Galleon's Silicon Valley executive connections. Several well-known long-only mutual funds are implicated in the sting, which reveals that they have consistently received privileged information from some of the largest public companies over the past decade.
14. The SEC launches an assault on mutual fund expenses. The SEC restricts 12b-1 mutual fund fees. In response to the proposal, asset management stocks crater.
15. The SEC restricts short-selling. The SEC announces major short-selling bans after stocks sag in the second quarter.
16. More hedge fund tumult emerges. Two of the most successful hedge fund managers extant announce their retirement and fund closures. One exits based on performance problems, the other based on legal problems.
17. Pandit is out and Cohen is in at Citigroup. Citigroup's Vikram Pandit is replaced by former Shearson Lehman Brothers Chairman Peter Cohen. Cohen replaces a number of senior Citigroup executives with Ramius Partners colleagues. Sandy Weill rejoins Citigroup as a senior consultant.
18. A weakened Republican party is in disarray. Sarah Palin announces that she has separated from her husband, leaving the Republican party firmly in the hands of former Massachusetts Governor Mitt Romney. An improving economy in early 2010 elevates President Obama's popularity back to pre-inauguration levels, and, despite the market's second-quarter decline, the country comes together after the Middle East conflict, producing a tidal wave of populism that moves ever more dramatically in legislation and spirit. With the Democratic tsunami (part deux) revived, the party wins November midterm elections by a landslide.
19. Tiger Woods makes a comeback. Tiger Woods and his wife reconcile in early 2010, and he returns earlier than expected to the PGA Tour. After announcing that his wife is pregnant with their third child, both the PGA Tour's and Tiger Woods' popularity rise to record levels, and the golfer signs a series of new commercial contracts that insure him a record $150 million of endorsement income in 2011.
20. The New York Yankees are sold to a Jack Welch-led investor group. The Steinbrenner family decides, for estate purposes, to sell the New York Yankees to a group headed by former General Electric (GE) Chairman Jack Welch.
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YoY earnings may be up, but the Xmas retail numbers are going to be horrifying.
We'll see how this plays in the very near term.
The first week of the new year sometimes sets the tone for the rest of the year. We may stumble out of the gate...
So basicly...nothing happens
Dr. Durden - how about a ZH prediction for 2010
Dougie may be right. Some these are cheap shots, a few that are wishful thinking and the rest out right, "this is new?"
This from the guy calling a top in October.
...and the guy who said Goldman would go private in 2009. (Or was it 2008? Can't remember exactly but it has been one of his themes for a while...)
Too bad for Goldman, too. They didn't really have any advantage being a public company this year.
/:
some context
Doug Kass's 20 Surprises Of 2009http://www.businessinsider.com/2008/12/doug-kasss-20-surprises-of-2009
By my count, 6 correct, 14 wrong. But not too shabby. Some of the ones he got right were sort of obvious though.
#20 was actually really good... even if he didn't mention Dubai.
#20 .... Try reading it again - low oil prices?
Karl Denniger did alot better in 2008 and so far for 2009 without the US weekly crap.
http://market-ticker.org/archives/689-Where-We-Are,-Where-Were-Heading-2...
Agreed.
Doug Kass is good. He seems to have a strong grasp of things.
He paints a broad picture that is not only plausible, but probable.
If he only gets 11 out of 20 right, he'd still have called the markets correctly.
-MobBarley
ps. that gold suppresion could continue indefinately is a plausible. They've managed well to keep it down thus far.
Tricks, baby.
highly unlikely...but good story.
#21 Ben Bernanke goes back to option ARMs because he sees housing only going up ;)
seriously - even this guy was playing the 5/1 game
http://www.fundmymutualfund.com/2009/12/ben-bernanke-refinances-out-of.html
Goldman will always act privatly but it will NEVER be private. It has to entwine itself into the fabric of society for protection.
Otherwise this is good semi fiction. But doubt seriously it could play at AT ALL like that.
Off Topic. STEC consolidation breakout. Good luck.
A little content free, but entertaining. The gold drop will hurt (me).
i would hate/love 2 see GS go private.. i will have to find a new market barameter.. but the vampire squidd always wins.. until they blow up.. i own way OTM puts in GS just incase they are the biggest blow up in history. but im sure my money will be wasted.
How do we short Doug Kass?
Who is Doug Kass....????
Who cares what Kass thinks....
Show me someone who "really" makes money....
With a "REAL" profit record....
Pundit this pundit that....getting old...
As a matter of fact....probably less than 1%
of the pundits that get on media....
Do not know how to make money in the markets....
Let's hear an
Amen....
#170986 - Show me someone who "really" makes money....
I believe you are looking for information from a dude who's country home is a dump such as this - (best of luck)
http://www.bing.com/maps/?v=2&cp=qvh1gr8vtg0t&scene=15419628&lvl=2&sty=b
That is right next door to my sister's house... no, I'm not kidding.
I know the people who know how to make money.
"4. The price of gold topples. Gold's price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market."
Really? Dropping from $1,100 to $900 constitutes toppling? No, you're god awful call of gold plunging from $1000 to $500 last year would consitute toppling. I'm sure John Paulson, one of the smartest hedge fund managers is going to abandon his gold fund because of an alleged $200 down move in gold.
Naw, considering where the bugs expect gold to be moving forward, a retracement back to $900 on an early Fed move and stronger dollar is a major blow (topple) to their thesis.
If the Fed does move early, I expect gold to head even lower.
Is gold at 1093 right now? I say it isn't. I say it's at 1190 to 1220 with the charges and fees and the money changer scales. Let's just watch this stupid show and see where it goes.
Keep shuffling and paper and prophecizing the decline of gold. It's a bullshit head fake to get people to sell.
depends on who you know, i suppose. i bought a 2008 kruggerand at $30 over spot yesterday. weeeeeeeeeeeeeeee!!!
What is even more absurd is predicting gold at $900 and war between Israel and Iran. That makes almost as much sense as global cooling means global warming...
And the price of oil would be?
and the price of everything would be?
Abso-freaken-lutely!!! Isreal attacking Iran and Iran's return stroke is the ultimate napalmed black swan.
Oil through the roof! International transport fee's would skyrocket overnight and the whole on-time delivery avalanche comes down with it!
Some of these won't get past April 1st. The new third political party will be the Nobel Prize party...
LOL
http://www.zerohedge.com/article/good-morning-worker-drones-week-mayhem-...
This ballscratcher always hits 2 or 3 of these, TOPS!
Thats because some of the calls are diametrically opposed -
1. I predict US GDP growth of 6% in 2010
2. I predict UST yields will be flat to declining in 2010.
I bet I get 1/2 right?
GS going private? How would that affect their status as far as recieving government funds?
He did nail the bottom back in March almost to the day though.
ie, Bernanke raising rates in April? That is, Bernanke raising rates in 4 months?
And this prognostication is made right after stating:
If you think Bernanke is going to raise rates in that environment, he would've raised rates yesterday.
The Yanks are gonna be bought by a Masshole loosah? Ugh- 2010 will suck.
Kass timed the bottom well but made very little money on his bullish call- does anyone have his performance record handy? This whole business is a bunch of nonsense until funny money goes away for good...
That's what made me think this isn't supposed to be serious. If the Steinbrenner family sells the Yankees, there is no doubt it will be the EOTWAWKI. THe US breaking apart is more likely. If I had to guess, that last one is there so that readers will pick up it's a list of very unlikely guesses.
Dougie nailed the market bottom at S&P 666. I think I'll give these predictions some consideration...
The fed raising rates just before a midterm election? The Dems regaining their 2008 pre-election popularity? LOL on both counts!!!
Jack Welch is a BoSox fan. I think the Steinbrenner family has already addressed the transition and control issues--they're not going anywhere.
As per the article.Bullpucky. Lots of wishfull hopes. Must be part of the Obama team.
Q> How do you save whats not earned due to lack of jobs? Moreover the dollar wont stretch that far what with rising food prices. Denial is great , but it wont get us out of the hole we are still digging.
How will the dollar remain strong while arabs and s. americans are setting up own currencies?
How can the juggling , lies and criminality coming to light day by day not be confronted by reality or foreign creditors.
Further, how long will traders remain fools and trade on a manipulated market?
How long till hunger and frustrations come to a boil amongst the public?
Will Martial Law (is there really doubt ) comes will the dollar still be up? And gold wont rise with coming sovereign defaults or a military conflict in mideast?
Disgusted by lies. another J6p
1-17 make sense, 18-20 are silly!
"Dougie nailed the market bottom at S&P 666. I think I'll give these predictions some consideration..."
Many of us nailed the market bottom. Anybody that listens to Kass blindly as a result of that is foolish. A majority of people prefer to NOT think.
Doug is going to be wrong on the majority of these predictions, as he was last year. No knock on him -- that's how forecasting and predictions work.
Doug will outperform many other people because he thinks, and has an investment thesis. I disagree with most of his macro views and take them with a grain of salt.
As far as I'm concerned we haven't had free markets for 6-9 months. QE, blatant manipulation of stock markets, interest rates, and socialization of losses will do that. Kass believes these actions will work. I don't.
Then you'll probably love Steve Keen's predictions...
http://pragcap.com/steve-keens-predictions-for-2010
A thousand thanks, dow3000, that was beautiful.
I love that Keen guy!
I believe Robert Prechter deserves a little credit for Doug's predictions.
SKF is a buy at the current levels, methinks...
only if you want to get burned.. ETFs are decaying like old beef on a hot day -- I'd be really careful about that trade.
I got out safely from SKF and getting my ass handed to me on SRS.
Daytrade only... beware, beware. Been there.
Another cheap shot at Sarah Palin from a pundit. No shock there.
http://www.businessinsider.com/2008/12/doug-kasss-20-surprises-of-2009
"Seabreeze partner Doug Kass was kind enough to send us his 20 surprise predictions for 2009. As Doug explains, these predictions are outliers, not events that have a high likelihood of occuring (if they did, they wouldn't be surprises)."
Nonetheless:
Doug must have smoked some good stuff before firing off that shotgun blast of WTF 2010 predictions.
Note to Doug: Drinking heavily and making predictions for the year ahead don't mix. Sabe? Capiche?
I think I'll stick with these guys, who batted 75% last year and saw this credit/debt induced cluster-f^&% from a few years back... http://www.europe2020.org/spip.php?article628&lang=en
Tiger Woods will never be the same and will throw several temper tantrums during his comeback tour after unrelenting heckling from former fans.
I agree. Tiger's wife has already declared "100% divorce, 100% Custody" so Kass is wrong on that one. Tiger will never be the golfer he was. No one has mentioned the possibility that Tiger's wife was tipped by the FBI investigating Tiger's doctor for steroids. That's how BALCO started (& Tiger is from No Cal, Stanford etc).
The security will be a nightmare. Tiger is so '00s.
Time to move on.
This is an End-of-the-Year Joke right?? I don't know anybody that even knows what they're having for lunch tomorrow - this is more visionary than one of those preachers with big hair.
1-17 are believable, but 18-20 are stupid!
A nice mix of comedy, honest contemplation of the probabilities, and doomsday mentality :)
Yawn, next-
Buffet kicks the bucket.
I predict that an alien mothership will land and put a stop the abuse of power of our world leaders. And Blossom Goodchild will say it isn't true this time after she channeled those psychotic fuckers last year.
My prediction? Durden reveals himself as Bernake, who then reveals himself as Dr Evil...who has used ZeroHedge to brainwash his minions to overthrow the world. He's financed through his ever-increasing CPM rates.
So let me get this - second half GDP growth is flat after the bombs are dropped in the Persian gulf - no mention of Oil after this minor event and the shiny stuff declines in value !
Doug Cass reveals himself as Michel de Nostredame. He's appointed Fed Chairman and we finally have a human who knows the exact right price to fix the money rate of interest. Almost divine in his prescience, he is seated at the right hand of Greenspan. I kick myself, in hindsight, for being so late on the trade.
The Dems win a landslide in Nov? How absurd. Kass is a Dem, so this is wishful thinking. First Republicans don't have enough open seats to suffer a landslide loss. Second all indications right now are Dems losing substantial seats in both houses. Long way off, but Kass is talking a complete reversal of the present state. I will be putting money at Intrade on Republican gains
Didn't know he was a limousine liberal. Figures. Obama is done, chump.
A prognostication for 2010, and no mention at all of the most damaging, ill conceived piece of legislation in country history. Atta boy, Doug.
P.S. The Palin fixation makes you seem like a weird old uncle.
Romney would crush Obama in 2012.
The Dems win a landslide in Nov? How absurd. Kass is a Dem, so this is wishful thinking. First Republicans don't have enough open seats to suffer a landslide loss. Second all indications right now are Dems losing substantial seats in both houses. Long way off, but Kass is talking a complete reversal of the present state. I will be putting money at Intrade on Republican gains.
Iran atacks Israel and Gold is in the tank... not!
oil back up over $100/bbl regardless
Bernanke is commited to not having asset price deflation.
Max Keiser with Steve Keen today
http://www.debtdeflation.com/blogs/
Dear Friends;
I believe retail numbers are going to be decent because of the low expectations but not above ten year trend. People are still shopping and shopping, its the real american past time. However, other issues that we will face in a few years is many people are using their 401k's as the new piggy bank. We are going to have many people retired who are not going to make enough money to live a normal quality life.
OK, I'll bite. S&P 1700 on Friday 12/31/10, and 2100 a year later. Model? Yes - mean extrapolation.
One nuke in the mideast and its all over . Kass , broke clock right twice a day . Wishful optimistic thinking , you been reading Mauldin Kass? I'll give Kass a 2 out of all his predictions . Whose data are you going to use for unemployment?
Gold topples China BUYS IT ALL
kass had a buy on xlf at around $24 in early 2008.