It is impossible to stop analysts and investors churning out improbably precise 12-month forecasts. Short View prefers to look at what people are not predicting. Here’s five possible surprises that are not priced in:
● Europe escapes with only a mild recession. This would give the eurozone a chance to grow its way out of crisis, support shares and hurt bonds of safe countries. Rising German business confidence gave a hint this week that this view is not completely daft.
● The US election has endless capacity to surprise. Still, a president and Congress from the same party with a clear mandate to cut the budget deficit would be a shock. Whether through Democrats raising taxes or Republicans cutting spending, signs that the US will one day have a balanced budget should help the dollar.