Here we will discuss forecasts for 2011 from top financial institutions
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Goldman Sachs is bullish on the U.S. economy for 2011, and forecasts U.S. stocks will see their third straight year of gains.
The investment banking powerhouse sees the S&P 500 1228.08 gaining nearly 25 percent to a level of 1450 in the next 12 months, fueled by strong corporate profits, easy monetary policies and an improving U.S. economy.
Goldman sees stocks gaining as the U.S. economic growth accelerating from 2.5 to 4 percent by the end of 2012, but says investors will continue to have doubt.
“Despite these many positives, the equity investing landscape is hard to decipher,” Goldman’s U.S. investment strategy team writes in its 2011 U.S. equity forecast, which is headlined “Easy Money, Hard Market.”
Investors remain understandably skeptical about positive economic data, Goldman says, because the improvement is coming from a fairly low base. But the strategists argue with strong corporate balance sheets, low inflation and interest rates that “the path of earnings growth has rarely been smoother.”
Goldman is recommending its clients increase their investments in cyclical sectors. It continues to overweight technology, and has raised its outlook on energy and financials to overweight from neutral.
Goldman also recommends investors underweight defensive sectors like health care, consumer staples and utilities.
Long U.S. Bank Stocks
Goldman’s global investment team rates U.S. Large Cap Commercial Banks among its "Top Trades for 2011." The firm expects financial sector earnings to grow 24 percnet, with the economic recovery leading to improving loan demands and credit trends for the big banks. It also believes the large cap banks will get back to paying dividends in 2011.
The firm recommends clients gain exposure to the sector through the KBW Bank Index or SPDR ETF based on the index
Commodities: Gold, Oil Higher in 2011
Goldman believes low U.S. interest rates will continue to underpin the rally in commodities like gold. The firm expects the precious metal futures to climb to $1,690 an ounce by the end of 2011 and continue to move higher.
But the firm believes prices will likely peak at $1,750 an ounce in 2012, as the U.S. recovery will see interest rates move higher.
Goldman’s commodities strategists also see oil futures rising to $105 dollars a barrel in 2011, and demand improving along with the U.S. economy. The firm notes, “Energy is historically the best performing sector when the ISM is above 50, which seems increasingly likely given strong October ISM and our US economists upgrade to their 2011 growth outlook.”
Currencies: Top Trade, Bad Call
Among the risks Goldman sees for 2011 is moderating growth in China, as Beijing tries to reign in inflation.
While its economic teams saw the improvement in U.S. growth lagging emerging markets in 2010, Goldman strategists believe the trend has reversed over the last six months, “with our US economics team now more constructive on domestic growth, but our China economists expecting monetary tightening through increases in interest rates and reserve requirements over the next three to six months.”
One of the firm’s top trades for 2011 involves shorting the U.S. dollar/Chinese yuan exchange. The firm argues low rates in the U.S. will keep the dollar lower, while China will have to let its currency rise next year, as it undertakes policies to control growth. “Rising external political pressure on the CNY from the US and other countries, as well as the threat of escalating trade tensions, expose China’s dependence on exports. More gradual CNY appreciation would help alleviate these tensions.”
While most of Goldman’s 2010 predictions on the U.S. stock market, commodities prices and economic growth have generally proven right on the money, its crystal ball was much more cloudy when it came to some key currency calls.
One of Goldman’s top trades for 2010 proved a big loser. The firm’s currency strategists recommended shorting the New Zealand dollar and going long the British pound, saying at the time, “We are more bullish on Sterling, linked to a stronger cyclical momentum in response to a large easing in financial conditions.”
But the Kiwi has been strong performer this year on the strength of the country’s rising commodity prices. The analyst who made that call reportedly apologized to clients in a recent note, saying it may have results in losses of more 12 percent.
Even Babe Ruth never batted a thousand.
CA$H IS KING
I'll bet 6000 level on DOW and less than 700 in S&P by 2011/2012
fragile economic growth is not enough to push economy wheel upward
unemployment is soaring and no indication of any comfortable easing in labor market
Europe still has room for more economic struggle
China's production utilization reach its peak, easing measures of growth has some signs which is supported by tightening monetary policy
macro economic variables still on surface
so don't rely alot on US economy to draw the world from such recession easily
we will enter depression in the next 3 years, still sustainable solution need lots of time to be implemented which is not seen till the moment
سيسجل مؤشر ال S&P 500 ارتفاع ب 15% في 2011 ليصل الى 1425 في نهاية ال 2011حيث سيتداول المؤشر على مرر 14 مرة ارباح ال 2012 اللي تقدر ب 102$/سهم ( ارباح ال 2011 تقدر ب 94$/سهم ). الارتفاع السعري في 2011 سيكون بسبب التمدد في الا PE RATIO عكس ماكان عليه الوضع في ال 2010 , الارتفاعات في 2010 كانت بسب ال RERATING لربحية المؤشر بحيث بدانا السنة بتوقع أرباح للS&P 500 ب 74$/سهم وارتفعت حاليا لتبلغ 83$/سهم ... أما في 2011 فسيكون الوضع ارتفاع للPE بحيث يتداول المؤشر عند 14 مرة أرباح ال 2012.
كيف ينظر البنك للقطاعات في 2011 :
Finance, Industrials, Energy, Materials, Technology & Discretionary
Staples , Utilities
النمو في ال GDP سيبلغ 3.50% على اساس 4Q/4Q مقابل 2.60% في 2010.
النمو في الوظائف في 2011 سيشابه اللي حصل في ال 1991 و 2001 وهو ما قد يؤدي الى اضافة 175 الف وظيفة/شهر.
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توقعات سريعة لل S&P 500 في نهاية ال 2011 ل 6 بنوك كبيرة , سأحاول مناقشة بعضها لاحقا ان شاء الله وسمح الوقت :
Deutsche Bank : 1500
Goldman Sachs : 1450
J.P. Morgan : 1425
Bank of America Merrill Lynch: 1400
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COMMODITIES 2011 OUTLOOK
Metals : Industrial & Preciuos
SILVER will gain 37% to as high as $40/ounce from the level of 29.1238/ounce as in Dec. 24, 2010.
Palladium will appreciate 18% from $764/ounce up to the level of $900/ounce
Zinc might advance as much as 21% to $2800/ton up from the level of $2308/ton as in Dec 24, 2010.
Copper might rise around 12% to $10475/tonfrom the record level it reached in Dec 21, 2010 of at $9392/ton.
Gold might appreciate 23% to as high as $1700/ounce. on of the most accurate analysts ,Jeffry Chritian, is expecting Gold to reach as high as $1550/ounce in the 1Q11 before decling to $1200/ounce.
Agricultural Commodities :
Wheat might advance 17% from $7.83/bushel as in Dec 23, up to $9.13/bushel .
Corn might advance 14% to $7/bushel up from $6.14
Coffee might be the worst agricultural performer with barely gains of 7% to $2.53 a pound from $2.359 as in Dec 23.
GS sees the preciuos metal index - Gold, Silve, Palladium & Platinium - gaining 28% in 2011 and a 18% gains in raw materials index
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The world’s most accurate foreign- exchange forecasters say the dollar will be the best currency to own this year as the Federal Reserve’s bond purchases bolster the U.S. economy instead of debasing America’s legal tender.
Wells Fargo & Co., Bank of Tokyo-Mitsubishi UFJ Ltd. and SJS Markets Ltd., say the dollar will strengthen against the euro, yen and pound. Nick Bennenbroek, the head strategist at Wells Fargo in New York and the most accurate of the group, predicts about a 5 percent gain against the euro over the year and 11 percent versus the yen.
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