This post is comprised of two key parts. We'll start with the views of yours truly, and then move onto your views.
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My outlook for 2021
Lets start with the Fed, aka... Print Central. As at Jan'1st 2021, the balance sheet stood at $7.363trn, having climbed from (Jan'1st 2020) $4.173trn.
The balance sheet should exceed $8trn by around mid year. That doesn't even require stimulus bill 5. Ten trillion by end 2021 is possible, with or without a secondary recessionary wave (foreclosures and other mid/long term economic damage via the lockdowns).
Further, the fed made it clear as crystal at the Dec'2020 FOMC, they expect to continue ZIRP until at least the end of 2023.
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Stocks for 2021
The following three lists are periodically updated, and I will endeavour to highlight them via Twitter.
Tier 1: $MSFT $JPM $AAPL $SLB $GOLD
Tier 2: $AMD $BAC $DIS $OXY $NEM
Tier 3: $NVDA $PYPL $TGT $EOG $PAAS
Tier 4: $MU $SQ $HD $PSX $WPM
Tier 5: $TSM $MOS $FCX $X $AG
I'd like to give particular attention to SLB and OXY
Soft target for Schlumberger are the 28/29s, with secondary of the 38/39s.
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Natural grand target for Occidental are the $46s. I'd accept that as 'crazy talk', but given a year, and if WTIC (at least) $65/66s, it looks feasible.
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The speculative list
Tier 1: $UAL $FCX $X $CRSR $PAAS
Tier 2: $DAL $VALE $CLF $CCL $AG
Tier 3: $AAL $TECK $ROKU $RCL $WPM
Tier 4: $JBLU $SCCO $EA $AG
Tier 5: $SAVE $ATVI $ZM $HL
The Dow components
Tier 1: $MSFT $JPM $AAPL $DIS $JNJ
Tier 2: $CSCO $V $HD $CAT $AMGN
Tier 3: $BA $AXP $CVX $PG $UNH
Tier 4: $CRM $NKE $HON $KO $MRK
Tier 5: $MCD $GS $MMM $VZ $WMT
Tier 6: $TRV $DOW $INTC $IBM $WBA
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Special mention for Twitter (TWTR)
Twitter was net higher for the year by +68.9%. The ultimate issue is whether it will kick Trump off the platform. Were Trump to get kicked, it could be expected that tens of millions would follow, and the stock would get nuked, at least to the 40/39 zone.
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Economy:
The US economy can be expected to continue to fair better than almost anywhere else, not least the economic basket-case of Europe. Ongoing Fed QE and US Govt' stimulus packages continue to help mask many of the structural problems, and there is zero reason to expect that to end any time soon.
Commodities:
WTIC - broader demand/supply issues should show further improvement relative to 2020. Having recently printed the $49s, psy'50 looks pretty easy. Big target
are the $65/66s, which seem possible as early as late spring. Key stocks: OXY, SLB, EOG, CVX, XOM
Gold - Having printed $2089 last August, further new historic highs appear due. Next big target is the $2400/2500 zone, with secondary of psy' $3K. Whilst a cooler dollar is inherently bullish for gold, its
not an absolute necessity for new highs. Key stocks: GOLD, NEM, AEM, KGC
Silver - Summer 2020 saw a decisive break above resistance of psy'20/21s, with a subsequent push to the $29s. Multi-month price structure of a bull flag has already been provisionally confirmed with the recent $27s. Key stocks: PAAS, AG, WPM, HL
Copper - where gold and silver go, copper can be expected to follow. With copper printing $3.65 in December, next soft target is psy' $4.00, with secondary of the 2011 historic high of $4.65. The latter does look rather probable by end 2021. Key
stocks, FCX, VALE, TECK, SCCO
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The mainstream targets...
Consensus is expecting nothing <3800, or above the 4300/4400s.
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Your views
First, many thanks to those that voted, and who retweeted some of the polls, to help pick up some extra voters.
Having settled the year at 3756, its not surprising to see a majority select the 4000-5000 range. I would agree that 5K looks out of range. Sub 3K appears unlikely, with the central banks ready to print off however many trillions are necessary to keep the bubble inflated.
A majority of you expect the US economy to avoid a recession in 2021, and I agree.
Maybe its just due to Twitter being rife with Bitcoin supporters. I will just add, there is no reason why all four can't be powerfully net higher by end 2021.
Having printed a new historic high in 2019 of $2089, I hold to next target of the $2400/2500 zone, with secondary of psy' $3K. Another 10% depreciation of the USD would certainly help!
Silver looks poised for next target of the $35/37 zone. Psy' $50 would arguably sync with Gold $3k.
Considering Bitcoin has (as of Jan'2nd) already printed $33221, psy'50k looks pretty easy, and frankly, I'd not be surprised to see >100k.
For the record, I hold a primary target of the $65/66 zone. The $70s look viable if the USD loses the DXY 88s and spirals to next support of 80/78.
Almost two thirds of you expect a net lower dollar by end 2021, and I very much agree.
Maybe you can forgive this somewhat intentionally provocative poll. I just couldn't resist.
Some of the 'other' merit a mention...
-The crash of the housing market given the acceleration of foreclosures that will start in the 2nd quarter of 2021
-Inflation, especially in service industries, composed of small business enterprises
-Insolvency
-The Republicans.
-Biden resigns. Kamala Harris takes over Presidency = black swan event.
-The WEF’s Great Reset. Hands down.
A rate hike does seem extremely unlikely, with the fed themselves stating they will continue ZIRP until at least the end of 2023.
Indeed, almost everyone is resigned to the fed keeping the printers spinning across 2021. Ten trillion isn't a stretch if you consider stimulus 5, 6, and maybe a 7.
For the record, if Trump doesn't continue as President beyond January, then I'd expect Twitter to eventually kick him off. Its implausible to see Trump ceasing the claims of 'fraud' and 'corrupt', and just quietly walking away into the sunset.
Two thirds of you expect Biden to be sworn in... and unless a truly historic event occurs next Wednesday, there is no reason to believe otherwise.
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A brief note on last year's outlook.
see: https://permabeardoomster.blogspot.com/2020/01/the-outlook-for-2020.html
I was very pleased with how BA and AMD played out, perhaps the best pair of individual stock calls I've ever made. Gold and silver, along with the related mining stocks did very well.
Two notable fails were LK and AMRN. On the former, I would just add that after MuddyWaters accused Luckin Coffee of fraud (Jan'31st 2020), I deemed the stock 'semi-toxic' when it printed $26.75.
My year end call for sp'3713 was just 43pts (1.2%) short of actual, and better than any of the mainstream.
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| 3.18pm GMT, Jan'2nd 2021 |
Final note
2021 is underway, and we can certainly expect some 'drama', perhaps starting next week. Regardless of how the US Presidency pans out, the human malware will remain a key issue across the mid and longer term.
Ohh, and let me note that I'm having to be restrained here. Its not my site, and Google, along with Twitter, Facebook, et al, are all continuing to narrow the range of what is 'permitted speech'. If you support freedom of speech and liberty, then go visit https://www.tradingsunset.com ... a place where I can say what I wish.
Q. What is my year end guess for the SPX? Assuming at least one major correction of 10-15%, and a couple of minor 5-8% ones, if I had to pin a number, maybe 4210.
I will end with thanks to my mini legion of subscribers, and those who regularly comment, request a chart, and retweet my work on Twitter.
Yours... another day... another year.
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*the next post on this page will likely appear 5pm EST on Monday, January 4th, 2021
