Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Shocking Stocks, Bonds and Dollar Market Predictions for 2014… And the Evidence to Prove Them

Stock-Markets / Financial Markets 2014 Jan 20, 2014 - 01:08 PM GMT

By: Money_Morning

Stock-Markets

Robert Hsu writes: Each January, we hear a chorus of pundits making predictions about where the markets will go in the 12 months ahead. The number and volume level of the "predictions" is matched only by the utter lack of evidence to back them up.

These talking heads will be the first to shout "I told you so!" But when they get it wrong, well... the silence is deafening. Their predictions are of little use to us.


But predictions themselves can be very useful. Making a well-reasoned prediction can be a great way to crystallize your thinking on important issues. It's also a good filter that can help you select which trends and sectors to embrace - and which to avoid - over the year ahead.

With this in mind, I have three predictions, all backed by compelling evidence, that will surprise you... and help you make a lot of money this year.

U.S. Stocks Will Continue with Double-Digit Gains

The Prediction: The S&P 500 will finish 2014 at 2,033 - about 10% higher than its closing value on Jan. 15.

The Evidence: The S&P 500 is coming off its best year since the bull market of the 1990s, as the domestic index vaulted nearly 30% in 2013. Given how big that gain was, can stocks really continue to rise in 2014? I mean, how much gas is left in this market's tank?

The answer is plenty. Here's why:

While the Federal Reserve has embarked on a "taper" of its quantitative easing program, I suspect that a Janet Yellen-led Federal Reserve will taper gradually. More importantly, the Fed's zero interest rate policy will remain in place for the entirety of 2014 - and likely well into 2015. The historically low cost of capital will provide sufficient liquidity for this market to keep moving higher, particularly over the next 12 months.

Then there are earnings. I expect they'll be strong in 2014.

We've already seen upbeat bank earnings, and they'll set the tone for all of 2014. You see, as this earning season unfolds, I expect we'll see many more unexpected earnings victories.

Yes, there will likely be some sluggishness on the top line for many companies; however, profit margins for many companies continue to improve as a result of greater efficiency and improved technology. That's a bullish combination, and a tailwind for earnings. That will keep pushing stocks into new high territory.

A Choppy Ride for Treasury Yield

The Prediction: By this time next year, the yield on the 10-Year Note will be 3.08%, a level that acknowledges the reality of economic growth in the U.S., but that also reflects the fact that growth will come at a slow and sluggish pace.

The Evidence: Bond prices slumped significantly in 2013, as the yield on the 10-Year Treasury note spiked to above 3% by the end of the year. The action in the bond pits last year reminded us that interest rates can, and do, move higher. That's something many recent bond market participants had forgotten, and I think it was a good lesson to be reminded of going forward.

As for yields in 2014, I expect there to be a continuation of the recent "choppy" market trading.

So far in 2014, the 10-Year yield has fallen back down to 2.84%, a move that I expected to see after the big run higher at the end of last year. I do, however, think this recent pullback is merely temporary, and I expect yields to rise back above that 3% mark. The path to that 3%-plus benchmark interest rate will, in my view, be choppy, as traders wage a battle for the direction of the cost of money.

The Dollar Will Stay Strong vs. the Euro and Yen

The Prediction: By the end of the year, I predict the dollar-yen exchange rate to rise to 110. The dollar-euro will undergo some normal fluctuations, but by this time next year I suspect it will be unchanged at 1.35.

The Evidence: The value of the greenback versus rival foreign currencies is on the minds of many these days, and for good reason. With the Fed tightening up the reins on its bond-buying program, we should expect that to be dollar-bullish.

I think the Fed's action is just part of the equation in the dollar-bullish thesis for 2014.

On the other side, the euro continues to be weak relative to other global currencies, while the Japanese yen has come under its own bearish pressure.

In the case of Japan, that nation continues the aggressive reflation efforts first instituted by Prime Minister Shinzō Abe. And, as we've seen, those policies are yen-bearish and dollar- bullish.

In Europe the pressure on the euro comes from a lack of any real widespread GDP growth, and that's a condition likely to persist throughout the year.

How about the Chinese yuan? The exchange rate of dollar and yuan is a bit more complicated because it is more political than market driven.

In terms of purchasing parity, the yuan remains overvalued at anything below 7.0, but the trend continues to be bullish for the yuan. I expect to see the dollar-yuan break 6.0 intra-year in 2014, then reverse trend and end the year at 6.1. In other words, right about where it started.

With all this said, we'll come back in 2015 and see how I did. In the meantime, if you have any predictions of your own - shocking or otherwise - I invite you to leave them in the Comment section below.

Source : http://moneymorning.com/2014/01/20/three-shocking-market-predictions-2014-evidence-prove/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in