A review of our "Ten for '10"

Back at the beginning of March, we made ten predictions for 2010, and I thought it might be interesting to see how these got on:

(1) Interest Rates: "These will remain low - globally". 1 out of 1. The impact of high unemployment and a race for the currency bottom has meant that, outside of a few examples (India, Australia etc.), interest rates have been held down in the interest of trying to encourage a bit of borrowing and investing. Not much success there, unless you count the consequential impact of hot money flows into Asian and the EM's
(2) Bond Yields: We raised the risk of a "bond buyers strike" arising from problems on the periphery causing bond buyers to demand higher yields overall. Whilst it's true that the PIIGS saw yields spike up massively in June in the face of the Greek crisis, the impact on bond yields elsewhere was limited as investors fled to the greater perceived security of the Fed, Bundesbank and BoJ. In the UK, the noises made by the UK government on budget cuts were well received and bond yields eased off. We'll score a half: 1 1/2 out of 2.
(3) Stockmarkets - Positive, although we suspected that leadership would move to developed markets as opposed to EM and Asia. We were right on the direction, wrong on the mix. Another 1/2: 2 out of 3.
(4) More bank capital raisings - Yes. Standard Chartered, a bunch of banks in Europe & Japan, though none of the majors in the USA. 3 out of 4.
(5) USD to surprise on the upside - Big no. The USD index was at 80.48 in March and is now at 77, whilst against the Yen it has gone from 90.38 to 81.18. Blame more QE for the slump, but we got it wrong. 3 out 0f 5.
(6) SGD to strengthen to 1.35. Back in March the SGD was standing at 1.3991. It's now at 1.2879. Although we got the direction right, we've been surprised by how far the MAS has allowed the currency to run up against a supposedly firm target range, so we won't score more than 1/2 on this one. 3 1/2 out of 6.
(7) Commodity prices - A gradual recovery was expected although with Gold rising to $1,300 (in March it was $1,125). It's now at just under $1,400, but we'll give ourselves that one. 4 1/2 out of 7.

So those were the main ones, on which we scored 64%, and I give my kids a hard time if they don't get 85%....!

Since you must ask, the other ones were:

(8) US politics: "Democrats to do better than expected in the mid terms on the basis that no-one could possibly vote for the nutty conservative right" (subsequently named the Tea Party). Umm, No. The Dems have hardly covered themselves with glory, but whoever said that common sense and democracy were good bed fellows? Winston Churchill's aphorisms that "the best argument against democracy is a 5 minute conversation with the average voter", and that "democracy is the worst from of government, except for all the others that have been tried from time to time" seem fairly apt here.
(9) UK politics - Conservatives to win with a narrow majority. Sort of, but only with the help of the Lib Dems. Sandals now mandatory in Cabinet meetings (plus socks).
(10) World Cup - Since Scotland had graciously removed itself from the competition in the qualifying rounds to give the other teams a shot, we predicted that England would obviously win since they had some highly motivated, experienced, cohesive team players. Trouble is, those guys were actually playing for Spain, and England had Wayne Rooney. Phew.

Steve
e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
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