2012 Prognosis

Having written about some macro trends, let us take a closer look on 2012. I will try to make some prognosis. In this high volatile times this is no easy play. Well, at the end of the year we can look back and assess how wrong I have been:

1) The US economy is the best looking house in a bad neighborhood, showing some growth in 2012.
2) China engineers a 'soft landing' and remains on a growth path, though less fast then in previous years.
3) The Europeans struggle a lot in the first months of 2012. Only after serious problems to refinance, they get their act together and the EZB floods the markets with EUR. Germans resistance to a weaker EUR will be overcome by the doves in the EZB.
4) As such, the EUR gets weaker vs. the USD at least for the first 6 months ...
5) ... and interest rates remain artificially low, as central banks world wide keep pressure on them.
6) Oil prices remain high, as supply is tight. This would only change if the economy crashes.
7) Gold will raise again in USD, for the 12th year in a row - and even more so in EUR.
8) US will not trigger a crisis with Iran as Obama tries to cut spending on military (but others might ...)

And some of the wilder ideas - not really that likely but thought-provoking:

9) Europe sees a bank holiday as the EURO-crisis forces governments to recapitalize quite a number of banks.
10) Several European governments will fall apart (candidates: Hungary, Czech, Germany, Greece, Spain, ...)
11) The Swiss Central Bank exits the tie to the EUR in order to keep a hard currency.

Thinking about low-risk short-term trades there come hardly any to my mind.
- One idea could be to go long US indices and short European ones (S&P500 vs. Eurostoxx50 or DAX30).
- An unhedged long position in USD is something I can hardly enter, though it seems to make sense short term. I does go against my gut feeling as the USD is doomed too, in the long run.

Bill Gross, the head of PIMCO, sees 2012 outlook 'as a bell-shaped curve' with not many investment opportunities in the middle, so that one could prefer to keep his money in a mattress. The fat, left and right tails are a collapse as everybody de-leverages or hyperinflation.