Investing

Credit Suisse's Incredible List of Potential 'Surprises for 2015’

The concept of Wall Street pundits making bold predictions is hardly new. In fact, sometimes the wilder the predictions, the more publicity a firm will draw, regardless whether any of the predictions actually come true. The long-time and very well respected former Morgan Stanley strategist Byron Wien has released his 10 top surprises each year for the past 30 years. These have become a Wall Street tradition.

Following in the same path, Credit Suisse global equity strategist Andrew Garthwaite and his team have come out with their own set of predictions for 2015, and some are downright chilling. In fact, the surprises for 2015 actually challenge many of the core beliefs the team holds now. In other words, these surprises could mean they are proven wrong.

Here are the 10 Credit Suisse “surprises for 2015.”

1) The stock market trades up and enters what is considered bubble territory, and then sells off by an astonishing 20%.

2) The Federal Reserve, despite an almost universal acceptance it will raise interest rates in 2015, keeps fed funds at near zero.

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3) Oil continues its plunge and finally stops at $35. Then it rallies all the way back to $70 a barrel. Some of the big oil majors have to cut the cherished dividends they pay.

4) U.S. high-yield crashes as the Fed raises rates. This is kind of an unusual prediction, considering #2.

5) China’s economy ends up hitting a hard landing. After years of huge growth, this could be a shock to the world system.

6) The euro trades below parity. In the case of the U.S. dollar for instance, it costs about $1.16 to a buy one euro. Should it go below parity, it would cost less than a dollar

7) Euro area gross domestic product grows at 1.5%. That would be very anemic.

8) The European Central Bank fails to expand its balance sheet. Many expect the bank this week to enact a quantitative easing program like the U.S. Federal Reserve has done multiple times, by buying various types of bonds. The failure to do so would be a huge surprise.

9) European utilities outperform. Given the outperformance of U.S. utility stocks for the past two years, this is not far-fetched at all.

10) The pharmaceutical sector sells off by 20%. Given the huge run in the sector since the late spring of 2012, this is not an unbelievable proposition. However, 20% for a very defensive sector seems like a lot.

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Well, there you have it. Some pretty amazing and potentially market-moving surprises. We reviewed Byron Wien’s top 10 surprises for 2015, and they are decidedly different in some ways, and similar in others to the prognostications from the Credit Suisse team. That said, the only way we will know about how either list does for sure is to review everything in January of 2016 and give a final scorecard then.

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