Prediction 2: Greece will begin official negotiations to exit the euro.
Prediction 3: President Obama wins reelection.
Prediction 4: China will allow the Renminbi (Yuan) to rise nearly 8% against the dollar.
Prediction 5: The commodity bull run resumes in 2012
Prediction 6: Europe will spend most of the year in a recession.
Prediction 7: The United States will avert recession, with GDP growth below 2%. However, wider recognition that a recession has been averted will kick in during the second quarter, and this belief will act as a catalyst for stocks.
Prediction 8: The 10 Year Treasury bill yield will move towards 3%.
Prediction 9 (this seems more like a “hope”): Brazil’s stock market, one of the worst performers in 2011, is going to be one of the best performers in 2012: As of this writing, the Brazil Bovespa Stock Index was off about 16% for the year. Expectations for Brazil were high going into 2011, and got dashed — despite an admirable performance by the Brazilian economy — putting a damper on equities there. Moreover, the real’s inexorable climb against the dollar (about 40% over the past three years) hampered Brazil’s exports. But I believe the market sold off far more than it should have and 2012 is going to be a different story. The central bank there is already loosening monetary policy to spur on growth, and stabilization in the currency should stave off the rise against the dollar. But an announcement in early December that the 2% tax on foreign equity investors (coupled with 6% tax on foreign debt holders) has been eliminated will, I think, bring investors off the sidelines, and into Brazilian equities…The easiest and most obvious way to play this is with the iShares MSCI Brazil Index Fund (NYSE: EWZ) and which is off about 23% so far in 2011.
Prediction 10: More shoes (like MF Global) will drop in 2012.