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8/14/2019 Wall Street Economic and Market Outlook 2010 From Sense on Cents
http://slidepdf.com/reader/full/wall-street-economic-and-market-outlook-2010-from-sense-on-cents 1/9
Birinyi Associates, Inc.
Page 1/2
© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 1/8
US Market & Economic Targets
S&P 500 EPS Estimate
S & P
5 0
0
I n d e x
T a r g e t
BAC
BCS
C
CS
GS
MS
UBS
DB
JPM
1,050
1,100
1,150
1,200
1,250
1,300
1,350
1,400
$64 $66 $68 $70 $72 $74 $76 $78 $80 $82 $84
Size =GDP Growth Estimate
The 2010 OutlooksIt is that time of year again when Wall Street publishestheir outlooks for next year. Nine major firms did notdisappoint, collectively publishing over 3,500 pages of2010 predictions.
While other outlooks will certainly be released after thispoint, some consensus has emerged for 2010.
• Strategists, on average, see the S&P 500gaining 9.5% to 1,222 and earning $76 pershare in 2010
• Despite the view that the S&P 500 will gain over9%, the consensus is to "underweight" or "bench-mark" US equities
• Oil will rally slightly to $80
• Gold will rally to $1,213
• The Dollar vs the Euro will end 2010 at 1.45
• The US economy is expected to grow 3.1%
• The FRB will not hike interest rates until at leastmid-2010
On pages two through four we summarize the macrooutlooks. Page five covers the view towards the US, sixand seven the world abroad, while key commodities arereviewed on page eight.
GDP %
Target EPS Growth
BoA / Merrill Lynch 1,275 $73 3.2%
Barclays 1,120 $66 3.5%
Citigroup 1,150 $73 2.2%
Credit Suisse 1,125 $76 2.7%
Deutsche Bank 1,325 $81 4.9%
Goldman Sachs 1,250 $76 2.1%
JPMorgan 1,300 $80 3.5%
Morgan Stanley 1,200 $77 2.9%
UBS 1,250 $80 2.6%
Average 1,222 $76 3.1%
S&P 500
Kevin Pleines203-341-0833
8/14/2019 Wall Street Economic and Market Outlook 2010 From Sense on Cents
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Birinyi Associates, Inc.
Page 2/2
© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 2/8
Macro View
10 Themes for 2010:
1. Government balance sheet risk
2. Rising taxation
3. Alternative yield strategies
4. Financial sector rehabilitation
5. Corporate cash flow beneficiaries
6. Rising global growth
7. Emerging market consumers
8. Commodity price inflation
9. Return of active management
10. Alternative energy
Top Three Investment Ideas:
1. Asia & Emerging-Market consumer (large-capEM financial and consumer related stocks & USand Japanese multinationals)
2. Tightening plays as markets tighten by raisingthe price of commodities, the yield of gov't bonds,value of EM currencies: long global banks (in-cluding Japan) and large cap energy stocks
3. Hedge tail risks such as bubbles in China andgold, a double-dip, trade protectionism or a USdollar crisis by buying puts on volatility usingoptions on China H-shares and S&P 500 financials
Investment Recommendations:Best Ideas for 2010
1. Buy US companies that generate a highpercentage of sales from BRICS
2. Invest in companies with high operating lever-age that currently run at the bottom of theirmargin cycles
3. Buy cyclical sectors now defensives later
4. Buy stocks high Sharpe ratio
5. Looking ahead to 2H: free cash flow anddividend growth
Key Themes for 2010:
1. Investment style: re-rating limited, earningsand yield are key
2. Equity regions: Emerging Markets are wellpositioned
3. Bonds: not the place to be
4. REITs: Bottoming Asset Value Cycle
5. Commodities: More moderate returns
10 Trades for 2010:
1. Overweight equities vs credit vs governmentbonds
2. Overweight Large Cap Growth
3. Overweight non-ferrous vs ferrous commod-ity equities / Overweight agri chemicals
4. Overweight global tobacco - Japan, US &Europe
5. Overweight Japanese industrials & exporters
6. Buy Euro pharma over US pharma
7. Overweight Consumer Non-Cyclicals vsCyclicals (Staples over Discretionary)
8. Overweight US large cap vs small caps
9. Overweight global autos/auto components
10. Underweight financials - (European & UK)
Bank of America/Merrill Lynch Goldman Sachs UBS Morgan Stanley
8/14/2019 Wall Street Economic and Market Outlook 2010 From Sense on Cents
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Birinyi Associates, Inc.
Page 3/2
© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 3/8
Macro View
Seven Trades for 2010:
1. Signficant recovery upside but also downsiderisks: best of both worlds high-quality cheapstocks on normalized earnings
2. M&A up cycle beginning: buy aquisition targets
3. Rising rates: long brokers and short REITs
4. Stronger US dollar: long retailers and shortenergy
5. Overweight US versus Emerging Markets: longUS financials and short EM financials
6. Flows follow: stay with value over growth
7. Uncertainty to decline: short S&P 500 12mforward volatility
Richard BernsteinCapital Management
10 Predictions for 2010:
1. Stock and bond market returns in the US willagain be positive
2. The US dollar is likely to meaningfully appreciateonce market-driven short term rates begin to rise
3. US dollar "carry trades" could get killed as 2010progresses and the US dollar appreciates
4. The Fed will spend the second half of the yeartrying to catch up to, and flatten, the yield curve
5. Corporate profits are likely to explode to theupside during 2010
6. Employment in the US will probably continue toimprove
7. Treasuries will probaly underperform stocks
8. Small cap value, I think, will be the best perform-ing size/style segment
9. Financial regulation will progress, but the bullmarket will probably aid politicians' "forgetfulness"
10. I think Democrats will do better in the 2010 mid-term elections than people currently think they will
Across JPM Research our Top 10 TradeRecommendations for 2010:
1. long EM equities
2. short USD versus EMFX
3. short USD versus EUR and JPY
4. short US agencies and MBS outright
5. long US HY outright
6. overweight US HG and EM external debt versusUST
7. long EM corporate credit
8. overweight cyclicals within equities
9. long lower-tier II bank bonds outright andversus government debt
10. long AAA CMBS/RMBS and A-rated CLOs
Deutsche Bank JPMorgan
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Birinyi Associates, Inc.
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© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 5/8
2010 Outlook: US Summary
1,222 $76
S&P 500 Year-End Target & EPSS&P 500 2010 Price Target
600
700
800
900
1,000
1,100
1,200
1,300
1,400
B A C
B C S C
C S
D B
G S
H S B C
J P M
M S
R B C
U B S
A v e r a g e
S&P 500 EPS in 2010
$30
$40
$50
$60
$70
$80
$90
B A C
B C S C
C S
D B
G S
J P M
M S
R B C
U B S
A v e r a g e
B a r c l a y s
C i t i g r o u p
D e u t
s c h e B a n k
G o l d
m a n S a c h s
J P M
o r g a n
M e r r i l l L y n c h
M o r g
a n S t a n l e y
U B S
Consumer Disc - = + - + - - -
Consumer Stap - = = = - = + +
Energy + + - + + + = +
Financials - + + = + + - =
Health Care + + = - = - + =
Industrials + - + = + + = -
Materials - - - + + = + =
Technology + = + + + = = +
Telecomm - = - - = - = -
Utilities - - - - - = - =
US Sector Weightings GDP Growth Next Year
2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%
Average - 3.1%
First Fed Rate Hike
Jan-10 Apr-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11
MS & UBS BCS C BAC JPM GS
8/14/2019 Wall Street Economic and Market Outlook 2010 From Sense on Cents
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Birinyi Associates, Inc.
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© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 6/8
2010: Looking Abroad - GDP
B a r c
l a y s
B N P P a
r i b a s
C i t i g r o u p
C r e
d i t S
u i s s e
D e u
t s c h
e B a n
k
G o
l d m a n
S a c
h s
H S B C
J P M o r g
a n
M e r r i l l L
y n c
h
M o r g a n
S t a n
l e y
U B S
A v e r a g e
Asia & Pacific
Australia 2.8 3.7 3.3 2.1 3.3 2.9 2.9 1.8 2.8China 9.6 9.6 9.8 10.5 7.8 11.9 9.5 9.5 10.1 10.0 9.0 9.8India 8.2 6.2 7.8 7.9 7.8 7.5 7.6 6.6 9.0 7.6
Indonesia 6.0 5.2 5.7 5.2 5.3 4.8 6.0 5.5Japan 1.7 1.5 1.5 1.4 2.2 3.5 0.8 1.8 1.8
Malaysia 5.0 5.0 5.5 4.2 6.3 5.0 6.0 5.3
New Zealand 2.5 2.7 2.8 2.0 2.5Philippines 4.3 4.3 4.2 5.0 5.0 4.6Singapore 6.5 5.5 6.5 5.8 5.3 6.5 7.0 6.2
South Korea 5.0 5.4 4.7 3.7 3.6 4.7 4.6 4.5Taiwan 6.0 5.8 3.3 4.0 4.4 5.8 4.4 4.8
Thailand 4.5 4.2 6.1 6.0 5.2
Europe & Eastern Europe
Czech Rep. 1.9 1.3 1.5 2.5 1.1 1.5 1.6Europe/Euro 1.5 1.3 1.5 1.8 2.6 1.5 2.5 2.2 0.5 2.4 1.8
France 1.4 1.5 1.8 1.2 1.8 2.7 1.9 0.5 2.3 1.7
Germany 2.4 1.6 2.0 2.2 2.5 3.6 1.2 1.0 2.1 2.1Hungary 0.3 0.4 0.5 1.0 0.2 -0.1 0.4
Italy 1.2 0.8 1.4 0.8 1.3 1.5 1.8 0.7 1.7 1.2Poland 3.0 2.2 2.6 3.2 3.5 2.4 2.8Russia 4.3 3.8 3.0 4.5 2.5 5.0 5.0 2.5 5.5 4.0
Spain -0.5 0.0 0.1 -0.3 0.1 -0.9 -0.2 -0.2U.K 1.5 2.0 1.5 1.8 3.0 1.9 1.7 1.6 1.2 1.5 1.8 1.8
Middle East & Africa
South Africa 2.4 2.6 2.6 3.0 3.2 2.8 2.7 2.8
Turkey 3.8 3.5 4.2 5.5 5.0 4.5 2.4 4.1
North America
Canada 3.4 2.1 2.5 2.8 2.1 2.4 2.5 2.9 2.6
US 3.5 2.2 2.7 3.3 2.1 2.9 3.5 3.2 2.9 2.6 2.9
S. America/Latin America
Argentina 3.5 3.2 2.0 2.0 4.0 3.9 2.2 1.0 2.9 2.7Brazil 5.3 4.1 5.0 4.0 5.8 6.2 5.3 4.8 4.5 5.0Chile 4.6 5.5 3.5 3.0 5.0 3.8 3.8 4.0 4.2
Colombia 3.4 2.4 2.5 2.0 3.0 3.0 4.1 3.8 3.0Mexico 5.1 4.0 3.6 2.3 4.2 3.5 2.1 2.4 2.5 3.3
Peru 3.9 5.0 5.4 4.1 4.9 4.5 4.6
Venezuela 2.4 -2.0 -1.7 2.6 2.5 0.6 0.0 -2.1 0.3
2010 GDP Growth Estimates (%)
GDP Growth Heat Map
= < -5% Growth= < 0% Growth= > 0% Growth
= > 5% Growth
= No Coverage
8/14/2019 Wall Street Economic and Market Outlook 2010 From Sense on Cents
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Birinyi Associates, Inc.
Page 7/2
© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 7/8
B N P P a r i b a s
C i t i g r o u p
C r e
d i t S
u i s s e
D e u
t s c h
e B a n
k
G o
l d m a n
S a c
h s
H S B C
J P M o r g
a n
M e r r i l l L y n c
h
M o r g a n
S t a n
l e y
U B S
Asia & Pacific
Asia ex. Japan + + + - + =
Australia - - -
China = + = + + - + + =
India + + + = + + - + +
Indonesia + + + = = =
Japan = = = + -
Malaysia - - - +
Philippines + - - +
Singapore + + + - = -
South Korea = + + + = - =
Taiwan + + - + + + + - = +Thailand + - - = -
Emerging Markets
Emerging Mkts + + + + + +
Europe & Eastern Europe
Europe + + + + - =
Czech Rep. + + = +
Hungary - - = +
Poland + = = = +
Russia + = - + + + +
United Kingdom + + + + - =
Middle East & Africa
Egypt + + -Israel - + - -
Pakistan + =
South Africa + - = - +
Turkey = = + + - =
S. America/Latin America
Argentina - =
Brazil + + + + = + = =
Chile + = - - -
Colombia = - -
Mexico - + + + - = -
Peru = - -
+ Overweight- Underweight= Equal Weight
Looking Abroad: Equity Market Weightings
Brazil Australia
China Malaysia
India IsraelTaiwan Malaysia
Indonesia Peru
Top "Overweights" Top "Underweights"
C i t i g r o u p
C r e d i t S u i s s e
D e u t s c h e B a n k
M e r r i l l L y n c h
M o r g a n S t a n l e y
U B S
US vs Int'l Markets - - + - = =
US Recommended Weight vs Global Markets
Leading/Lagging Equity Markets
8/14/2019 Wall Street Economic and Market Outlook 2010 From Sense on Cents
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Birinyi Associates, Inc.
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© Copyright 2009, Birinyi Associates, Inc.The information herein was obtained from sources which Birinyi Associates, Inc.believes reliable, but we do not guarantee its accuracy. Neither the information, nor anyopinion expressed, constitutes a solicitation of the purchase or sale or any securities orcommodities.
BULLETIN: Strategy 09-S-271 December 22, 2009 Page 8/8
Commodities
Euro vs Copper Gold Crude OilUSD ($/metric ton) ($/oz) ($/barrel)
BoA / Merrill Lynch 1.28 7,125 1,500 85Barclays 1.45 6,563 1,088 85Citigroup 1.59 7,500 1,200 84
Credit Suisse 1.54 - - 70Deutsche Bank 1.40 5,732 1,150 65
Goldman Sachs 1.35 - - 95
JPMorgan 1.50 7,100 1,288 78Morgan Stanley - - - 85
UBS 1.50 - 1,050 75
Average $1.45 $6,804 $1,213 $80
2010 Forecasts
DB
GS
JPM
Current
CS
BAC/ML
BCS
CMS
UBS
Average
$50
$55
$60
$65
$70
$75
$80
$85
$90
$95
$100
End-2010Oil Forecast
DB
JPM
Current
BAC/ML
BCS
C
UBS
Average
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
End-2010Gold Forecast
DB
GS
JPM
Current
CS
BAC/ML
BCS
C
UBS
Average
$1.20
$1.25
$1.30
$1.35
$1.40
$1.45
$1.50
$1.55
$1.60
$1.65
End-2010EUR/USD
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