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Golden Predictions

04/14/2016

There is a huge investment bank that just agreed to pay a $5 BILLION penalty for its actions in selling mortgage-backed-securities — you know, those securities that ignited the global financial crisis in 2008/9.  (In my less-than-humble judgment, they escaped blame far too easily.)  Still, they have a great research department, which predicts:

1.  The S&P 500 will rise about 2.5% over the next twelve months.  (No collapse)
2.  GDP growth in the U.S. will rise only slightly from 2.1% this year to 2.2% next year.  (Steady)
3.  GDP growth in Japan, the U.K., and the Euro area are also essentially flat for two years.
4.  GDP growth in China will continue to slow from 6.9% last year to 6.1% in 2018. (Big deal)
5.  Interest rates will rise about half a point in Europe & Japan but a full point here within 12 months
6.  The Euro will lose 16.3%, while the Yen will appreciate 15.7% over the next twelve months.
7.  Oil with increase to $57/bbl in the same time frame.  (Let us pray)
8.  Gold and cooper will lose about 18% of their value over the next twelve months.

I would not argue with any of those predictions, except that I don’t believe the Fed will have four quarter-point increases in a year when GDP growth is only 2.2%.

My prayer is that their prediction of oil increasing to $57/bbl is correct.  Yes, that would increase the price-at-the-pump for the otherwise healthy consumer sector, but it would also “save” the energy sector and lessen the likely huge loan losses at the banks, which reduces credit availability for everybody else.

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