2015 RECAP

10 Surprises for 2015 (RECAP What I said in 2014 eoy)

Surprise No 1: Low oil is here to stay

 I think low oil is here to stay and its become the new norm for oil to trade between $30-$60 dollars a barrel for the next 2 years. Why? Too much supply and most shale producers are not planning to cut production. The only way they cut is if their companies go bankrupt which is a possibility. Most investors are expecting a quick rebound. I don't think so for some time. I think it would be difficult for oil to cross $80 a barrel for the next 5 years. Low oil is the new norm.

UPDATE: CORRECT, The Current price of oil is $36.99. I totally nailed this call. The drillers are about to go bankrupt. Oil funds having investors ask for their money back. Glencore almost bankrupt and oil Hard commodity producers getting killed.

Surprise No 2: Airlines outperform

I think if the low oil stays low for a long period of time the airline stocks will all go parabolic. This is because the industry has suffered for 30 years with high oil CAP EX. The industry has cleaned up its CAP EX with technology and with better margins on ticket sales it will help rally this sector to parabolic levels. Especially when they rip you off with the extra bag costs.
 

UPDATE: WRONG, The Current price of DJUSAR is $247.  Low oil did not translate into higher margins for airlines. The stocks may have been too richly priced in 2014 thus having little room to move in 2015. Another idea is some of the airlines rallied but you had to be selective.

Surprise No 3: Cyber wars go big

 I think there is a good chance the US and another country such as China or North Korea get entangled into a cyber war due to hacking. Either a company vs a country or a country vs a company will ensue more cyber violence. Some big network could be affected and we could loose a part of the internet or one of the major exchanges in the US go down.

UPDATE: CORRECT, PANW went from 125 to 195. This was a great year for cyber security firms. They even made a show about security called "Mr Robot. This has been a crazy year for hackers. Security is a must for many major corporations. Big firms are now moving to the cloud to increase security.

Surprise No 4: Apple hits 1 Trillion market cap

 As mobile computing continue to expand across the world and more people jump on the information super highway it has helped so many social related companies. I honestly think Apple computer is the pinnacle player in this realm. They have high margins and high volume. Apple continues to innovate and create new products for the next generation of the technology evolution. Apple will possibly the first US company to hit a 1 trillion market cap. To gain another 300 billion in market value requires another 2-3 years of great innovation and wonderfull sales tactics which Apple has always been able to deliver.

UPDATE: 50/50 Kinda Right, The Current price of AAPL is $107.  The new Iphones, Smart watch and all the other things Apple did this year did not help the bottom line for equity expansion. Sadly, AAPL did not reward investors in 2015.  The stock did peak out at $130 but ran into trouble when the I-watch did not sell as expected. Maybe next year.

Surprise No 5: Healthcare continues outperform

 Companies like Wallgreens and CVS are going to continue higher. Health related sector has gained massively from Obama care.  All sorts of health related companies now are gaining value from the regulation in healthcare. The government is splitting the costs of drugs.

UPDATE: CORRECT, The Current price of  CVS is $107.  The broad sector did go higher and many hedge funds that were health care related made allot of money. The industry did not get a big boost in 2015 because most of the low hanging fruit was found in 2014. You had to be selective with the stocks you bought.

Surprise No 6: Autos outperform

 If oil continues to stay low this may create an opportunity for car makers and dealers to do better then expected and the lack for E/V cars fall as people flock traditional gas vehicles.  Auto makers and dealers will continue higher into 2015 as the big three sell more cars ever than before in recent history. The better economy helps all auto dealers wit low interst rates on auto loans.

UPDATE: WRONG, The Current price of  F is $14 and GM is $34  Autos had a flat year which shows that the world economy may be slowing. The US Economy peaked out in first half of 2015 and allot of industries stalled such as Autos.

Surprise No 7:  Electric cars demand fall bad for TSLA

 I think TSLA will not do so well in 2015 because lack of demand for electric will be delayed until oil stabilizes. This is bearish for Tesla motors and the stock may head down to the $120 level during 2015. Tesla will rebound eventually as oil prices continue higher in the back half of 2015.

UPDATE: WRONG, The Current price of  TSLA is $243. TSLA did rally to $280 in first half of 2015 but then ran out of juice as with the rest of the Auto Industry and the broad US economy. I expected TSLA to selloff because of low oil but that did not happen. Investors seem to keep the demand for TSLA as its seen as a cult stock.





Surprise No 8: Bond Yields Rise

The long bubble in the bond market will finally come to an end as the payout of bonds to stocks has finally begin to shift the reversal. The moves by the fed will switch the trend from equities to bonds in the back half of 2015.

UPDATE: CORRECT, The Current price of  the 30Y note is $3.04. Bonds did not rise much because the FOMC delayed increasing rates up until the last month of the year. Yellen skipped multiple rate increases to focus on the strength of the recovery.

Surprise No 9: China housing crashes 

I think the long awaited crash in the housing bubble of china begins to break down asset prices. China will have to devalue its currency to deal with the major housing collapse. They have been building one stop without the need for organic growth. Sooner or later this market will collapse. This could also spill over into all markets and become a catalyst for a selloff in all asset prices in the world

UPDATE: WRONG, China stock market did crash but the Real Estate market held up. I totally missed this one. Maybe next year.

Surprise No 10: Inflation comes back

 I think the low oil prices coupled with easy money printing as well as a good economy with jobs will finally create asset inflation for the common folks of the economy. This will jack up asset prices in consumer inflation. This is the ugly form of inflation that hurts consumers. This will spur the fed to raise interest rates quicker than expected.

UPDATE: WRONG, Inflation did not go up because the Federal Reserve is keeping the reserve ratio at banks high. They are manipulating the economy to force inflation to near zero. Adding with the melt down in oil and other commodities we have deflation going on in some industries.