A release from the TABB Group claims Larry hit on 80% of his 2012 predictions and a staggering 89% of his 2013 predictions, which begs the question what does Larry see for 2014?
In the run-up to his prognostications Tabb points out that while 2014 will be a better year in general for markets, he does not expect the same performance by equities. “While 2013 will be remembered as one of the great equity investing years of all time – U.S. equity returns (S&P 500) breached 30%, IPOs returned, and active management began to wipe the tarnish off its brand – for most banks, brokers and exchanges, the outcome did not live up to the hype,” Tabb notes. “Quantitative Easing kept volatility and volumes low; and regulation, fines and insider trading scandals kept the industry tied in knots.”
He says the industry will see a little relief from the constant focus on new regulations and investors will be better positioned to take advantage of gains in equities, which he expects to be good though not as strong as in 2013.
On regulation, he expects the world to follow the CFTC’s lead and comply with most of its mandates though not without slight alterations and banks will get relief from some of the more onerous aspects of the new regulations.
Below are Tabb’s predictions for 2014 by category with a little editorial commentary from me.
1. Growth will continue its upward trend. Europe will move from +/- 0% growth to positive territory, averaging about 2% growth. While it won’t be anything fantastic, it will be a positive step. Meanwhile, Asia growth will get back on track as well.
DC: Agree, though nothing exciting about a return to mediocrity.
2. Fed QE will be reduced, which will cause and uptick in interest rates and volatility. But rates will not rise above 4%, and the non-abrupt pulling of the QE rug out from under the economy will allow for a fairly soft landing. As a result, there won’t be any major Western QE-related crashes/crises.
DC: Another rather tame prediction. A bigger deal should be made of what the Fed has managed to accomplish in the midst of political dysfunction.
3. The most aggressive prediction here is that Washington will settle down and not shut down. The government will begin to function more normally, and there will be an increased level of cooperation between Republicans and Democrats.
DC: Washington will act responsibly and politicians will meet the minimal requirements of their jobs! Now Larry is going out on a limb.