I wrote this at the beginning of January and forgot to post it. This was given out for free to listeners after Wall St for Main St recorded its 2013 review/2014 preview podcast. Some of the things are already coming true. Some predictions I look foolish on for now, but we'll see what happens during the rest of 2014!
· The general stock market indexes like the DOW, S&P 500, NASDAQ, etc may have a tiny correction of up to 10-15% in 2014 but they will end 2014 substantially higher than they did in 2013. We are in the early stages of an accelerating Von Mises' style Crack up Boom where the general markets, especially the large caps, go up on flight capital from other countries and liquidity and not on revenue or margin growth. EPS is growing almost entirely from cheap capital and the ability to buy back shares to increase earnings to hide stagnant or declining revenues. The central planners want a controlled 10-15% higher move per year in stocks until all paper fiat currencies collapse. Remember, stock markets in Zimbabwe and Weimar Germany went sky high in nominal terms while their real economies fell apart.
· Gold & Silver- Charts are trying to put in strong double bottoms despite the paper price manipulations. May be further downside in the near term, but in my opinion the downside is now limited due to supply/demand fundamental reality as more and more mines have been shut down and continue to close in the face of rising demand for metal. My best educated guess is I expect gold to be in the 1500-1600 range by end of 2014 and silver to be 25-30
· Yen is now over 104 against the US Dollar and in 2013 we thought it would drop a lot from 80 which is around where it started in 2013. It dropped a lot in 2013 and we expect this strong trend to continue in 2014. The Yen may test 115 against the Dollar and could break 120. Japan's central bank is actually printing more Yen via their own QE and monetizing debt faster than the US Federal Reserve is.
· WTI oil prices should stay in a wide trading range in 2014 thanks to increased production and supply from US Shale oil. The WTI/Brent spread should not narrow to being even. Investors should maintain large exposure to all types of oil companies in pipelines, drilling, production, etc. Over $600 billion per year will be spent on oil investments per year just to keep the oil production flat.
· Google will be the next large cap technology bubble stock. I expect it to be above $1300 by the end of 2014 driven by fundamentals and momentum traders only chasing a bullish chart pattern. Google does have strong fundamentals, a lot of earnings growth potential in the near term and a strong pipeline of innovative products but the trend trading hedge funds who do not care about fundamentals will turn this stock into a huge bubble over the next few years.
· Interest rates on the 10 year US Treasury could spike to above 3% say to 4 or even 5% and stay there for a brief time before backdoor collusion, coordination and manipulation between Western central banks and large banks moves interest rates back down. This temporary interest rate spike would cause a large bank, most likely a European bank like Deutche Bank, to need a bailout or the bank is nationalized, broken up and the good parts are sold off, or one of these types of scenarios. The point of this is that governments and large banks cannot handle a large spike in interest rates and most likely at least 1 medium or large Western bank in 2014 will not be able to stand on its own anymore.
· There will be more Arab Springs and more Cyprus style bail-ins coming in the next few years. Developing countries in Africa, the Middle East, South America and Asia have the highest percentage of annual incomes spent towards food and gasoline. They are the most sensitive. Cyprus was a real life science experiment by the central planners to test bail-ins instead of bailouts and also to try and steal billions from Gazprom, Putin and Russian oligarchs that had money stashed in Cypriot banks. The IMF has been releasing long white papers talking about trying out more bail-ins all over the globe and countries like the US and Canada have already made them legal via legislation now. Smaller, periphery countries in the EU and developing countries are most likely for bail-ins first before larger, developed countries' depositors.
· Some governments of developing periphery countries will collapse in the next few years due to inflation causing higher food and energy prices and then these lead to riots and revolution.
· The commodities cyclical bear market has ended for many commodities especially for food, energy and precious metals. 2014 will not be a huge move higher but strong bottoms will be put in and in 2014 these markets will start to move higher again slowly on momentum and short covering. Momentum will accelerate and setup for big potential commodity price spikes in 2015-2017.
· Inflation or deflation, technology industries like 3D printing, robotics, big data/data mining, cyber security, software/algorithms, mobile/miniaturization, and biotech, etc will continue to flourish. Technology industries are well capitalized and financed often without any debt to fuel growth.