US Small Caps, Tech Stocks, Bund Yields, Treasuries!

Dear Reader,

I expect the main US indices S&P 500, DJIA, Nasdaq to post gains of 5-8% in 2017. I expect small caps to outperform with the Russell 2000 index rising 10-15% driven by the inward policies of Donald Trump.

I do not expect his tax changes to be sweeping. The US does not have fiscal room to decrease taxes a lot, but a gradual decrease of 5% of the US corporate tax rate could be expected.

Oil is to fall mildly below 50 USD in the first quarter driven by US shale resurgence. Gold is to go up by circa 10% in 2017.

I believe the Federal Reserve will hike only once the Federal Funds Rate in 2017. More hikes, three especially, could plunge the US economy in recession.

Technology stocks should continue their march higher. The smartphone boom is far from over. Most tech stocks are more than fairly valued, but the excesses should be absorbed by growth in the near term.

The EUR/USD should touch parity in 2017, but finish the year closer to 1.05.

I forecast that German 10 year government bond yields will stay low, below 0.50% in 2017, and lower for longer. The eurozone economy needs the stimulus badly still.

The yield on the 10 year treasury should finish the year closer to 2.50% than 3.00%.


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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.)!


Kind regards,
Petar Posledovich