2010 Analysis: Four Scenarios

I have managed to collect some analysis, predictions and commentaries from some of the worlds leading financial firms and experts, In the days to come I will present them here at econotwist.worldpress.com. Hopefully you will find them usefull and intersting. To kick off the ball; here’s the team of analysts at Europe‘s biggest bank, Deutsche Bank, who predicts four posible scenarios for 2010.

“One of the largest challenges will be funding the still large global government insurance in a world with less quantitative easing. QE limited the discussion of the impact of crowding out in 2009. Will we be as fortunate in 2010?”

Deutsche Bank

(Aricle in Norwegian, original report in English)

Jeg har samlet noen analyser, prognoser og kommentarer om den globale økonomiske utviklingen fra noen av verdens ledeende finansforetak og eksperter.  I dagene fremover vil jeg presentere den en etter en her på econotwist.worldpress.com. Først ut er analyseteamet til Deutsche Bank. Den europeiske storbanken skisserer fire mulige scenarioer for 2010.

– Selv om vi er positive på kort sikt, er det klart når vi ser på verden i dag at det nåværende makromiljøet vil være vanskelig å beholde. I 2010 vil markedet trenge tydelige beviser på at landene som har stått for de mest aggressive mottiltakene under finanskrisen er på stø kurs tilbake til finansiell disiplin. Hvis ikke vil vi fortsette å bygge opp risikoen for statlige gjeldsbomber som kan forstyrre bedringen i det svake næringslivet, skriver Deutsche Bank.

– Og skulle 2010 bli et nytt vanskelig år, er det lite sansynlig at katalysatoren vil komme fra aksjemarkedet eller det kommersielle kredittmarkedet. Det betyr at de makroøkonomiske forholdene vil styre økonomien i 2010, og i realiteten vil dem som har investert i statsobligasjoner rundt om i verden være dem som avgjør skjebnen til andre mer risikofylte investeringsklasser, konkluderer analytikerne.

Deutsche Bank skissere fire mulige scenarioer for den økonomiske utviklingen neste år.

1.(mest optimistisk) “This scenario is one where the authorities have as good a year as they did in 2009. They likely keep stimulus extremely high in the system without there being any noticeable consequences of their actions. Under this scenario we would expect equities to be significantly higher, credit spreads be much tighter but with bond yields only edging slightly higher as the authorities are seen to have firm control of inflation expectations and may even be continuing to buy bonds.”

2.(mest sansynlig) “This scenario is the most likely and suggests that we start to see gradual easing off the gas from the authorities but only as it’s proved that there is some momentum in the underlying economy. Under this scenario risk assets have a good year but returns are checked to some degree by rising bond yields and less stimulus being injected into markets. A satisfactory year for risk, especially equities, but a mildly negative one for fixed income. Credit investors will likely have to rely on spreads to get positive total returns.”

3.(mindre sansynlig) “This is the second most likely scenario overall in 2010 but one that potentially becomes more likely as the year progresses. Here we are likely to see sharply higher bond yields start to disrupt the positive momentum in markets. These higher yields could be either due to Government supply starting to overwhelm demand, or because of inflation fears. It seems unlikely that actual inflation will be a concern in 2010 but it’s quite possible for expectations to become unanchored. We would also have to include the potential for a Sovereign crisis somewhere in the Developed world within this scenario. We would note that the higher yields in this scenario are not based on positive growth momentum but by inflation/Sovereign risk.”

4. (skrekk-scenarioet) “This is the nightmare scenario of Deflation or in less extreme terms perhaps a double-dip. Given that much of the world is currently still in negative YoY inflation territory it is difficult to completely rule out even if we do live in a fiat currency system and even if inflation is expected to return to positive territory in early 2010. For deflation to be sustained we would probably need an exogenous event to hamper the authorities ability to continue to successfully fight this credit crisis. Such events could be a fresh banking crisis arising, a political backlash encouraging immediate increases in economic regulation or withdrawal of stimulus, or possibly a Government bond/currency sell-off that forces the authorities to aggressively reign in stimulus for fear of a sovereign  risis.”

Den europeiske iTraxx-indeksen som måler prisen på europeiske Credit-default Swaps:

Prisen for å forsikre statlig gjeld (Credit-default Swaps) er på vei opp igjen.

Her er hele analysen fra Deutsche Bank.

Tidligere analyser:

UniCredit

Danske Bank

Et bilde sier mer enn tusen ord.

Blant de andre observasjonene er blant annet:

* Gull (som nå koster rundt 1200 dollar per unse) har ikke vært billigere siden begynnelsen på 70-tallet.

* Obligasjoner er en klart bedre investering enn aksjer.

* Negativ utlånsvekst i USA.

* Boliglånsrentene vil ligge på rekordlave nivåer til forbi 2015.

* Kjerneinflasjonen i flere land vil falle mot 0%.

Når det gjelder valg av strategi for året som kommer, siterer Edwards  styreformannen i det kinesiske statlige investeringsfondet,  (China Investment Corp), Lou Jiwei:

“It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose,”

Her er hele analysen fra Société Générale Cross Asset Reasearch:

Tidligere analyser:

UniCredit

Danske Bank

Deutsche Bank

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