Predictions for 2002 (2/2)
Macroeconomics: Recession for the first half of 2002, and the second half of 2002 will see this so-called "economic recovery".
Short term interest rates will go from 1.75% to 4.00% at the end of the year. Long bond (30 year) rates will head up from about 5.4% to 7-8%.
Inflation should be about 3-4%, as measured by CPI/PPI.
The Canadian dollar will go under US$0.60 per CDN$1.00. The Euro will go nowhere.
The Japanese economy will continue remaining the piece of garbage it currently is. The Yen will continue its downslide, and the extreme debt to GDP ratio that the Japanese government has put themselves into will eventually catch up to the Japanese people. I don't think an economic collapse will occur this year, but at their current trend, they are looking in severe trouble.
Energy prices will remain steady, oil at around $20/barrel. This will be interrupted by price spikes due to tension (if not all outright war) in Saudi Arabia, and Iran.
The real estate market *may* collapse in 2002. I'm not entirely sure, but rising interest rates will kill the refinancing markets, and should cause drops in property values.
Osama bin Laden is never found, or seen again. Presumably, he is dead.
The price of a 3.5GHz Intel processor will be US$300 at the end of 2002.
Hydrogen fuel cell technology will STILL be nowhere. Sales of hybird-electric vehicles will be tepid. For that matter, sales of cars will be decreasing, simply because the zero percent financing in the later half of 2001 will have cannabalized car sales for 2002.
Microsoft will still be duking it out with Sony in the console wars. Nintendo will survive with their classic game developers, and their niche audience of young people.
Airline service will continue to be as shitty as usual, and even though the perception of security will continue to increase, there will still be stories of idiots brining guns and other nasty items on board. Eventually the federal government will get so pissed off at the airline's inept attempt at security, so that they'll start levying some significant punishment for non-compliances.
Republicans get the senate in 2002.
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Market calls for the end of 2002:
^DJX: 11000
^IXIC: 2450
^NDX/QQQ: 1950/48
^SPX: 1320
Five stocks to rise (alphabetical order):
1. AFCI (Advanced Fibre): Bandwidth is NOT in right now, but in 2002, this should improve somewhat. AFCI concentrates on the last mile. Their balance sheet is strong, and the CFO has done an excellent job keeping the company in strong shape, starting with the hedge of 10.8M shares of CSCO, initiated in February 2000. Talk about having a great market timer at the helm. Ended 2001 at $17.67/share, or $1.448B market cap.
2. CEGE (Cell Genesys): Company specializing in oncology, specifically with cancer vaccines, oncolytic viruses, and (preclinical) gene therapies. Balance sheet is solid due to management of how the company has sold ABGX shares; company still has half a billion dollars to spend developing its products. Pipeline is still in mid-stage clinical, although showing promising results for small cell lung cancer, and prostate cancer. Management seems capable, and has scaled up manufacturing abilities for later stage clinicals. Ended 2001 at $23.24/share or $804.9M.
3. MIR (Mirant): Power generation company that got badly hammered after the Enron debacle, but the company should be in a good position to pull in money in the future with its assets, since it is relatively untouched. Debt leverage is satisfactory, and the stock looks cheap at this moment. Ended 2001 at $16.01 per share or $5457M.
4. MTP (Montana Power Company): Company has made all the wrong decisions for the past two years, and suffice to say, their stock has been hammered to hell. The company is trying to divest their power generation business to concentrate on their telecommunications network. The only saving grace this company has is that their network (unlike 360Networks and many other players out there) has been already built, without the crippling effects of high yield debt. The company did manage to get some bridge financing ($150M) for 300 basis points above treasuries, so that implies the bond market doesn't think things are as worse for MTP as the stock market thinks. Ended 2001 at $5.75/share or $596.7M.
5. SNDK (Sandisk): This maker of compact flash cards is in a cyclical industry, and I'm guessing that the macro trend right now is upwards due to the fact that SNDK's balance sheet is much stronger than anybody else in the industry right now. Very high risk play. Ended 2001 at $14.40 per share, or $983.4M. |
