Large US and EU Bank Stocks Undervalued, US Tech Stocks Overvalued in the short-term, Gold to touch 1000 USD in 2016!

Dear Reader,

Lately, stock markets around the world have rallied. I still think we are in for a 20% fall from recent peaks in the major indices on Wall Street: DJIA, S&P 500 and Nasdaq Composite. In the mean time, opportunistic rallies could be used for trading gains.

Contrary to popular views, I still believe the Federal Reserve will hike the Federal Funds Rate by 0.25% in March 2016. The US economy is going strong compared with the global economy. The unemployment rate in the US is 4.9%, which for me is quite low. The Core Personal Consumption Expenditures Index is 1.7% which is quite close the 2.00% target of the Federal Reserve.
    I believe the Federal Reserve will want to preempt a jump in inflation and will make precautionary hikes, instead of abtruptly tightening later.

I expect the Federal Reserve to hike the Federal Funds Rate at least two times in 2016.

I expect 10 year US treasury yield to touch 2.7% in 2016. I expect the 10 year German Bund yield to reach 1.0% in 2016.

Large cap US banks as JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley etc. should outperform. Large cap European Banks as Deutsche, Barclays, Santander, HSBC, Unicredit, Credit Suisse, UBS etc. seem grossly undervalued.

I expect the bubble in (small and nonpublic) technology stocks to burst. For many tech companies like Groupon, Zynga, GoPro, Fuel, Twitter and LinkedIn this has already happened and there have been massive revaluations. Many small and nonpublic tech companies have experienced down rounds and revaluations. I expect this trend to broaden. From the bust however, new global IT leaders will be born.

I do think Twitter and LinkedIn will remain large cap tech companies and retain leading roles in the online advertising market. Facebook seems overvalued, but the correction should not be by more than 40%. Twitter and LinkedIn seem undervalued with midterm holding horizon(3-5 years).

Gold is to fall to 1000 in 2016. Oil to go back to 50-60 USD in 2016. USDJPY to fall to 110. I expect parity EUR/USD 1.00 in 2016.

For me base metals and oil have found a bottom, provided the Chinese economy does not fall of a cliff.

In the long term(5-7 years) Brazil, Russia, India, China and South Africa(BRICS) stocks seem undervalued. In the short-term, I expect more volatility. If China experiences hard landing all major emerging markets stocks will be dragged lower.


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Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!