While we felt we had prepared a fairly comprehensive summary in this weekend’s 2012 Outlook review, several storylines have surfaced in the past two days which we thought are worth mentioning and have been getting some press.
- Adam Parker at Morgan Stanley made headlines with a contrarian and bearish call for the S&P at 1167 by year-end, mainly citing lower corporate revenues/earnings than the Street is
forecasting
- As a counterpoint, many articles pointing to U.S. Chief Equity Strategist Tobias Levkovich at Citi who has been getting a lot of ink for a piece titled “The Raging Bull Thesis”. It is being
reported he upped his year-end forecast to 1425 on the S&P.
- USA Today had a cover story in its Business Section yesterday titled “10 Reasons Stocks May Fare Better in 2012.”
- Ned David Research is suggesting that an “extreme of worry has been reached” and that if Europe can manage its crisis, making all-time highs on the S&P this year is not out of the
question. They suggest European policymakers are capable of preventing a Lehman-like fallout.
- Bloomberg came out with its own 13 analyst survey with an “average” prediction of 1338 for the S&P by year-end 2012 (versus the Barron’s panel mean of 1360).
- Bloomberg also had a story which reported the results of a survey of 184 bank analysts. “Analysts’ failure to foresee declining earnings per share for the biggest U.S. banks last year
hasn’t stopped them from predicting an even bigger profit surge for 2012, with an average profit forecast of +57% for the six largest U.S. banks.”
- BofA/Merrill Lynch analyst Mary Ann Bartels says the market might follow a historical pattern of “bottoming in years ending in “2’s”, and may launch a new cyclical bull run.”
- David Kostin, chief U.S. equity strategist at Goldman Sachs, was on CNBC today explaining his call for a flat 2012 in equities (1250 on the S&P). He attributes the call to three
factors: stagnating economic growth (1.7%), limited multiple growth historically during slow recoveries and modest earnings growth. He did say he thought the risk to the forecast was on the
upside and favored sectors such as tech, consumer staples, and telecom.
- And what really got our attention was yesterday’s lead in the Wall Street Journal. Hedge fund Bridgewater Associates, one of the largest if not the largest pure hedge fund, put up a +25%
positive return last year. Yesterday’s headline was “Bridgewater Takes Grim 2012 View”, citing slow growth and high unemployment for the world’s developed economies. “What you have is a picture
of broken economic systems that are operating on life support,” said Robert Prince, co-chief investment officer. “Stocks remain vulnerable to air pockets but for longer-term investors with a
decade or longer time horizon, equities may be a good buy.”
According to the Journal, “The views of Bridgewater are keenly watched by other investors, given its elevated status in the competitive world of hedge-fund investing. Currently Bridgewater’s Pure Alpha Strategy Fund is positioned for higher gold prices, stronger Asian emerging-market currencies, and lower yields across high quality government bond markets. Ironically, Mr. Prince feels a moribund economic environment is pretty much priced in right now and without substantial air pockets, ‘chances are equities are a pretty good bet in the long run’.”
Just thought you would like to know. We promise no more on the many 2012 outlooks, at least until they start changing, of course.
Good Trading!
David W. (aka The Underground Trader)
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