As an active investor, it is always interesting to make some intuitive judgement, and test it ad-hoc. Here I lay out some of the promising investments of the year.
Short term: 1-3 months
1. Short Nasdaq and S&P; (expected: 5% profit)
Trump admistration has to deliver a sound 100-day result to the financial market. The current market exhausts the expectation of economic recovery, and wait for the complete picture of Trump's plan. Yet, the announcement of immigrant restriction and H1B saction have been blasted by major technology firms and even GS. It seems that, the protectionism that Trump advocates will contront more obstacles from firms and domestic immigrant. The extreme instability will soon tranform into inconfidence in future performance of major listed firms, thus make it plasuible to start short US while there is still liquidity out there.
2. Long Dollar and short Yen; (expected: 1%, without leverage)
Despite the fact that Mr. Abe has made great effect to negotiate for a new trade deal, if not worse, with Trump, no doubtly that Trump will aim for the domestic Automobile industry and target the enormous export from Japan. Indeed, Trump has sacked the Mexican factory plan of Toyota, and accuse Japan of protecting domestic automobile industry.
Fed has been dovish under Ms. Yellen. FOMC is unlikely to raise interest rate in March, due to the fragile goverment balance sheet, commitment to shrink fed MBS/bond holding passively, and missed inflation target. Thus it makes sense to stay positive about Dollar. In the meantime, EU and Japan will have to keep a loose Monetary policy, due to the uncertainty in GDP growth.
Middle term: 1-2 year
1. Short Singapore index and long Malysia assets/property
Purely from geopolitical point of view.
2. Long Chinese Stock index and short bond index.
China is forced to raise base interest rate, to pull back international money flow, and stabilize a weak currency. It seems that 7 is the psychological support of Chinese monetary authority. Only if GDP growth in Q1 and Q2 are paticularly fragile, that China will allow Yuan to break 7, at the year of political tranform.
This period of loose monetary policy from 2014 has ended. Bond market will suffered from weak housing price growth, credit events and tight monetary policy.