Previziuni SaxoBank 2007

Posted: December 21, 2010 in Burse
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Materialul in intregime aici

Saxo-Bank-Yearly-Outlook-2007-EN

 

1. US recession at year’s end 2007

Never before in modern history has there been a sharper deceleration in US home

prices: Home Equity Loans, Mortgage Refinances, Construction… the housing boom

has been a significant driver. International and historical experience with slowdowns

as significant as this suggests that we will see a recession by year’s end 2007.

2. A “Big oil” company to be de-listed

Next year should see yet another record in terms of private equity deals and we see

an expansion in this playing field expand to include the oil-related sector, a group

largely untouched so far. Also, we expect deal size to increase dramatically, leading

to one of the truly big oil companies to be targeted. Home Depot is currently

rumored to be in play, a $80B company, but we think a deal worth twice as much is

possible next year.

3.Patterson (PTEN) to double

We are bullish on oil services next year and believe the underperformance of the past

year for this group was unwarranted. Increased demand for drilling etc. will underpin

the sector and we have pegged several stocks that offer compelling value. Our

favorite among the pack is Patterson, a stock that currently trades at 5.9 forward

earnings and commands a conservative balance sheet. To us, this company could

easily become a buy-out target next year.

4. AUDJPY to 100 then to 85

We expect the carry trade theme to continue through the first half of 2007. We also

call an additional rate hike by the RBA, which will squeeze the pair higher. Then we

predict most rate hike cycles from traditional high yields to peak, along with BoJ

continuing their process of normalizing rates.

5. S&P 1500 Home Building Index to 795, then to test lows of 521

The index is now trading around 690. We expect the index to go higher during the

first half of the year. It might even test the neckline of the big head-and-shoulders

formation from 2005. But deteriorating housing figures will weigh heavily on the

index, especially during the second half of the year.

6. USDNOK to 5.40

Our expectation of a significant downside move in this cross contrasts sharply to

market consensus. We expect Norges Bank to go to 5.0%, with the Fed cutting to

4.0%, giving the pair one of the most attractive yield spreads in the market. We also

expect oil to firm above $65 in 2007, a development which will lend additional

support to the krone.

7. NZDSEK to 4.00

We predict a breakdown in Kiwi in 2007. Rates, in our view, have peaked at 7.25%

and we expect Uridashi redemptions, along with a mass unloading of carry trades, to

weigh heavily on the NZD. SEK should continue to strengthen on strong fundamentals

while Riksbank maintains an tighter monetary policy throughout 2007.

8. Silver to $20

We remain silver bulls and continue to favor an extremely tight supply/demand setup.

Furthermore, it is common these days to hear of shortages and delays in

deliveries on futures, which will continue to take a toll, sending silver higher through

2007.

9. USDTRY to 135 then to 155

We expect the present downtrend to remain intact through the first part of 2007, but

as the unwinding of carry trades starts, the lack of risk will be felt in emerging

markets where we expect TRY to feel the pain.

10. Fed fund rate to 4.00% by year’s end

We predict a recession by year’s end 2007. Under these circumstances, the Fed’s

policy response will be to cut rates beyond the 4.75% currently expected by the

market. Most of the year will be relatively strong, in our view, but economic growth

will decelerate sharply towards the latter part of the year. This won’t leave the Fed

much room (time) to cut more rates to more than 4.00%.

The 2007 – “Stagflation Light” Portfolio

In 2006, we were quite cautious when picking stocks for our yearly portfolio. Only

conservative, dividend-rich stocks were chosen (Deutsche Telecom and Pfizer). At the

same time, we were bullish on precious metals and crude oil, short General Motors

and short GBP and NZD. We were also long on Chevron, Brazilian shares and a

Japanese home builder (Sekisui House).

The informed investor will recall that General Motors outperformed the broader stock

markets in 2006. Shortly after the turn of the year, a series of large, corporate

reconstruction programs was announced, which us to recommend taking off this

position in a quarterly update in the spring. Both of our FX plays were losers (short

NZD and GBP), but our call for Brazilian stocks to go higher was especially good.

We therefore present two graphs for the performance of the suggested top picks for

2006: one with and one without a short position in General Motors.

Traders following our advice to get out of the short GM position in the spring would

have made around 9.5 percent in the space of a year. In the same period, the FTSE

World Index rose by around 19 percent, but Bunds and US 10-Year Treasuries have

fallen in the same period. Surely our return is half of what we made last year, but

the portfolio is intended more to induce thought than to make a return. After all, we

are pretty much abstaining from a dynamic approach by choosing a fixed composition

of the portfolio at year’s end. With conspicuous exception made for the case of

General Motors, we usually don’t make changes throughout the year.

Our recommendations for 2007 are naturally closely related to the predictions in this

report:

2007 top picks:

We recommend taking a 10 percent position in each of these assets

Long spot silver and spot gold (half and half)

Like last year, we remain bullish on precious metals. We still see an extremely tight

supply/demand set-up for silver. It is common these days to hear of shortages and

delays in deliveries on futures, which will continue to take a toll, sending silver

higher through 2007. Gold should also test the previous highs at 730, when a stronger

JPY will cause turmoil in Emerging Markets.

Long WTI Crude Futures

Asymmetrical risk favours the upside, also in 2007: consider Nigerian elections in

April, a potential meltdown in Iraq (or Iran), and the miracle of Russian supply growth

to peter out. OPEC will likely cut more to maintain oil field pressures and keep prices

above 60 dollars per barrel. There are a number of reasons to be long on energy in

2007, especially from this rather low entry point.

Short USDNOK

Our expectation of a significant downside move in this cross contrasts sharply to

market consensus. We expect Norges Bank to go 5.0%, with the Fed cutting to 4.0%

giving this pair one of the most attractive change in Yield. We also expect oil to firm

above $65 in 2007 adding additional support.

Short NZDSEK

We predict a breakdown in Kiwi in 2007. Rates, in our view, have peaked at 7.25%

and we expect Uridashi redemptions, along with a mass unloading of carry trades, to

weigh heavily on the NZD. SEK should continue to strengthen on strong fundamentals

while Riksbank maintains an expansionary monetary policy throughout 2007.

Long Patterson UTI (PTEN:xnas)

Despite a solid year with increased EPS and crucial capital investments, the stock

dropped below $30. We believed this development to be wholly unwarranted, as the

stock now trades on deeply depressed multiples. We expect oil services in general to

see a strong year in 2007.

Humana (HUM:xnys)

With a cloudy economic outlook next year, defensive stocks should perform well. Like

its sector peer CVH, Humana offers an attractive mix of low risk and attractivegrowth. We believe the sector in general will benefit from demographic changes in

the years to come.

Novartis (NOVN:xvtx)

Our favorite European drugmaker, we believe this company is uniquely positioned in

cancer and cardiovascular segments in the mid- and long-term. This stock trades at

attractive multiples compared to peers.

CSR (CSR:xlon)

We believe CSR is a turnaround story for 2007. It’s well positioned in the Bluetooth

arena but the stock has been hit hard this year and is therefore trading at extremely

interesting multiples. Above all, CSR is a decent buyout target, not least considering

the acquisitions seen thus far within chipmakers.

Munich Re (MUVGn:xetr)

We expect further improvement in both top- and bottom line at Munich Re, and

there’s certainly room for multiple expansion compared to other European insurance

companies.

NTT Docomo (9437:xtks)

This is the leading wireless provider in the Asian region and a frontrunner in

delivering rich content to end users. We believe the stock’s two-and-a-half-year

slump is drawing to an end, as the company looks poised for considerable growth, not

least if we see a pickup in Japanese domestic demand.

Intregul material aici:

Saxo-Bank-Yearly-Outlook-2007-EN

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