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December 30, 2010 at 09:02 AM
Okay, we can all look back and snicker at demographer Harry Dent’s prediction that the Dow would reach 40,000 by 2009. He was only off by 34,000 points, but he made a bundle on his book of the same name. Other reputable sources that got it wrong include Art Laffer’s bet with Peter Schiff in 2006 that the nation’s economy was not, in fact, in trouble. Even though Schiff won that round, he can hardly claim a perfect track record. Getting it wrong is just something that comes with the “predictin’ business” (few care to revisit Nostradamus and his Detroit Lions Super Bowl claim).
With this in mind, we take a look at some of the zanier market takes for the upcoming year. We’d say we’ll revisit them at the end of 2011 to see who was right—but why bother?
1). Germany Leaves the EU, the EU Splits
Reports of Saxo Bank’s annual “10 Outrageous Predictions” are everywhere. We happened to view them at Minyanville.com. If you haven’t gotten your market news from a cartoon bull and bear, you haven’t lived. According to Steen Jakobsen, who produces the annual list:
“Germany leaves the EU−or rather Germany is forced to leave the EU with its strict rules on emergency funds. From a game-theory point of view, several countries would be better off outside the EU rather than inside. The EU splits into two tiers: one with Germany and restrictive fiscal policy rules, and the other comprised of countries on the outside−namely, the PIIGS.”
2). Emerging Markets Plunge 50% By June
Jakobsen has some truly wacky predictions, but given all that’s happened, this one unfortunately falls in the realm of possibility.
“Emerging markets, specifically the BRICs, are down 50% by the half-year mark. Emerging markets are going into 2011 15% overvalued. Brazil is about to see a U.S.-like banking scandal that becomes the catalyst.”
3). Canadian Dollar Will Rocket to $2 U.S.
The Canucks get in on the act, courtesy of the Vancouver Sun. According to the paper:
“We’ll say ‘the Canadian dollar is rising fast,’ but it’ll actually be more a case of the U.S. dollar dropping through the floor. Chinese government officials will use greenbacks as toilet paper and nuclear reactor radiation shielding while Irish government officials launch an international marketing campaign with the slogan ‘Ireland: Yes we’re broke, but we’re not America broke.’
4). Crazy SEC Predictions For 2011
Despite the headline, it’s not what you think. Tennessee will be in the top 25 when they face Florida next year, and Auburn will be 6-6.
5). U.S. Congress Blocks Bernanke’s QE3
“Congress blocks the Fed’s authority to expand its balance sheet, and sets up an eventual challenge of the Fed’s dual employment/inflation mandate.”
This one is also attributed to Jakobsen. Our friends at Motley Fool say this one’s possible, but if the sell-off in U.S. Treasuries in recent weeks does imply that growth will finally kick in during 2011, rather than being challenged by Republicans, Bernanke might be recognized as a hero. We’ll see.
