Nice list via UBS:
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These sorts of forecasts were once uncommon. I wonder what it means when lots of people try to guess what the deviations from normal expectancies will be?
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Source:
Ten surprises for 2010
UBS Investment Research
Global Investment Strategy, 15 December 2009
www.ubs.com/investmentresearch
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
Retail Sales in Jan rose .4% headline m/o/m, .7% ex auto's, .6% ex auto's and gasoline and .7% at the core. The headline figure was less than expected while the rest were slightly better. But, with respect to non headline sales, because Dec figures were revised lower, taking the two months together were about in line with forecasts overall. Sales rose in electronics, building materials, food/beverages, clothing, sporting goods, dept stores and restaurant/bars and fell interestingly for online retailers, health/personal care, furniture and motor vehicle/parts. Bottom line, headline sales were below expectations due to the greater than expected fall m/o/m...
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December 17th, 2009 at 2:39 pm
It obviously means — no big surprises, because somebody will have anticipated the “surprises”, most likely a LOT of somebodies. And that means no huge moves in the markets, just a lot of jitteriness. Head-fakes are the soup du jour.
At least until the surprise that nobody expected arrives.
December 17th, 2009 at 2:46 pm
I see # 3, 5 and 9 as “straw men”, i.e., I don’t really agree that those represent the “base case”.
From my point of view, the surprises would be if (a) the VIX DID NOT get to the 15 level, (b) oil does NOT get to $100, and (c) bank regulation is NOT so chocked full of loopholes that it ends up having no teeth (to mix metaphors).
December 17th, 2009 at 2:48 pm
11) I get rich … I go broke
Yeah, there’s a lotta insight here. How about neither happens?
It seems to me that the UBS list leaves a lot to be desired. So far as I can tell, there is absolutely nothing that makes their selections either-or choices. There is a wide swath of middle ground alternatives for each of their items.
Appears to be a list of talking points for a broker to bedazzle a client with and then steer them into whatever the firm happens to be selling that day.
December 17th, 2009 at 2:52 pm
It is interesting that they do not consider “oil drops to $50/bbl” a scenario worthy of consideration, or that “US unemployment continues to rise to about 12% in 2011″ is not a possibility worthy of consideration.
Or that “financial reform breaks up TBTF banksters, competent mid-sized banks grow into the market space left behind” is not a possibility. But then, it probably isn’t. That one WOULD be a shocker.
December 17th, 2009 at 2:54 pm
It’s the sort of worthless we-cover-all-our bases gobbledigook that gives Wall Street a bad name.
Rightfully so, I might add.
December 17th, 2009 at 2:55 pm
It means the blogosphere rules the world.
December 17th, 2009 at 3:13 pm
I wonder what it means when lots of people try to guess what the deviations from normal expectancies will be?
They become smug Lebanese with a Deep OTM fund?
December 17th, 2009 at 3:20 pm
so . . .are they making decisions baed on the “surprises”- if not- then why bother-
for instance- if my “surprise” is the earth will be hit by a meteor but do not take it upon myself to prepare my “meteor defenses”- why bother saying it at all- because I will be just as prepared as the next chump if I do nothing
December 17th, 2009 at 3:33 pm
The base case proves the behavioral economists right. UBS is merely projecting the current into the future. I expect none of the base or surprise happen as they predict. It will probably substantially different as these forecasts are notoriously inaccurate.
December 17th, 2009 at 3:33 pm
The thing is this is typical Wall Street “surprises” — they are not really “surprises”…they’re “half-hearted…if we’re wrong, it’s because things are even better than expected” so don’t worry yourselves too much…
Surely it’d be a far bigger surprise (to UBS) if…
7). FED leaves rates on hold for the entire year
8). Labour wins! (I’m not sure how a hung parliament falls in anyone’s definition of a surprise)
9). Oil prices fall under $50
10). China devalues
December 17th, 2009 at 3:38 pm
@constantnormal
I think the value of this list is exactly that there is a wide swath of middle ground alternatives for each of their items. If you make a list in the form of “either X or not X” how is that helpful? The UBS list eliminates a lot of possibilities, so if either of the cases come true they are still ahead of the average.
Like you said yourself, it is interesting that they don’t consider the case of oil below $50 or unemployment above 12%…
December 17th, 2009 at 3:42 pm
From my favorite baseball player turned economist:
It is tough to make predictions, especially about the future. – YOGI BERRA
Nobody goes there anymore. It’s too crowded – YOGI BERRA
http://viewpointsofacommoditytrader.com/419/suckers-for-prediction/
December 17th, 2009 at 4:25 pm
Go long Magic 8 Balls
December 17th, 2009 at 4:53 pm
Pros are more concerned about career risk and aren’t going to take chances to wander away from the herd, so lists like this are more for the retail investor to entertain them with the perception that their mutual fund portfolio manager or separately managed account managers even thinks about these things when making investment decisions…
It’s interesting–that Fed Fund being raised is always about two quarters away…it’s kind of like getting bad directions when driving…”just a little further down the road–just a bit further, just a bit…”
Oh, and hasn’t the VIX been basically “low” in the 20′s for a couple quarters now? So wouldn’t the surprise be a spike to the high 30′s or40′s?
Wouldn’t the surprise actually be a boring market with mid-single digit returns? All the estimates I see look pretty strong, and all the contrary opinions predict the end of the bear mkt rally. Boredom would be a surprise perhaps to all.
I wouldn’t bet against more regulation. I wouldn’t bet against more efforts for “stimulus”. I wouldn’t bet that Dem’s retain their majority in both houses. I would prefer they lose the House because Pelosi is a bit of a nutter and scares me.
I think it would be a surprise to see the dollar strengthen and not effect the market–b/c “everyone knows” they are negatively correlated… (which they haven’t always been).
I think from a chart standpoint the surprise would be to the upside on the S&P500 because that would mean a short-term trendline plows through a longer-term trendline on the first attempt…
I think I will be surprised if McCain can re-instate some version of Glass-Steagal. If he does, he’ll be many people’s hero and provide a platform for Republicans to ride on into the elections… Oh the irony, the party that is all about de-regulation changing stripes and regulating b/c the democrats sold out!
I think not enough global leaders have watched horror movies—they seem all too quick to believe the monster is dead!
December 17th, 2009 at 5:03 pm
What if the banks shouldn’t have paid off tarp? That would be a surprise…
December 17th, 2009 at 6:43 pm
How about we threw $700B into a $2T hole and then governments balked at further stimuli and we failed to escape deflation after all…? After all, it’s not like we are stupid dumb ass tools like the Japanese…
These guys are naive and arrogant beyond belief to think they have killed the beast. It’s Pantomime season…
“Look out, it’s behind you…”
What about a major Swiss bank blows up, is nationalized and their bankers get fired and make no bonii for 2010?