I thought this was interesting:
Following are Wein's 10 Surprises of 2003:
1.The U.S. equity market defies the return to-the-mean, modest-return pundits and surges more than 25 percent in the first half of the year. A Teflon-like dollar draws support from stronger-than-expected earnings growth and a recognition of America's economic, political, and military strength. Foreign capital inflows surge and individual investors start to buy again.
2.The U.S. economy confounds double-dip and deflation worrywarts, and shows 4% real growth in 2003. Consumers hold their own and capital spending rebounds. Inflation rises, and the Federal Reserve increases short-term rates 100 basis points in the second half. Yields on 10-year Treasuries move toward 5.5% as the balance-of-payments deficit approaches $600 billion and the federal deficit threatens to reach $200 billion. The U.S. stock market comes under some valuation pressure in the second half, but still closes up strongly for the year.
3.Japan finally seems serious about implementing financial reforms. Government support helps the banks there face up to non-performing loans, import barriers are lifted, profits begin to recover, and the Nikkei 225 climbs to 11,000. Japanese Prime Minister Koizumi proposes an historic free-trade agreement with the new Chinese leadership. Asia becomes the new engine of global growth, pushing the U.S. into second place.
4.Starting with France, several member countries lose confidence in European Monetary Union and threaten to pull out. They believe Germany, once the economic envy of the Continent, is dragging the system down. Sensing a lack of confidence, German Chancellor Gerhard Schroeder resigns. European equity markets badly lag the U.S. and Japan.
5.Government legislative relief on the double taxation of dividends encourages some technology companies to start making quarterly payouts to shareholders from their huge cash hoards. Cisco, Dell, Oracle, and Microsoft lead the way.
6.The housing bubble doesn't burst; it grows larger. Home prices rise in the Rust Belt [the manufacturing-intensive northern states], while remaining elevated on the two coasts. Alan Greenspan resigns as Federal Reserve chairman, saying he isn't up to handling yet another bubble. Lennar and Centex are strong performers.
7.With a massive U.S. military force at his borders and U.N. inspectors increasing the pressure, Saddam Hussein decides to step down and seek asylum in Libya rather than watch the slaughter of thousands of his people. North Korea's Kim Jong Il negotiates with U.S. and U.N. representatives and agrees to stop converting spent uranium fuel rods into weapons-grade plutonium. We get through the year without a major military battle in the Middle East or Asia, increasing investor confidence and reducing the risk premium for equities. Oil remains in tight supply, however, and hovers at $30 a barrel. Oil service stocks Schlumberger, Halliburton, and BJ Services break out and deliver strong performance.
8.After a difficult period, a number of significant biotechnology products receive Food and Drug Administration approval. This group, which had weak performance in 2002, comes alive. Amgen and Gilead perform especially well.
9.Just as Pakistan, with all of its terrorist problems, was the most rewarding emerging market of 2002, Brazil leads Latin America, the almost-forgotten continent, to a stock market recovery. Tighter fiscal control, higher agricultural commodity prices, and the U.S. recovery fuel the turnaround.
10.Expressing concern about the lack of vitality, spirit, and vision in the Democratic Party, Hillary Clinton announces she will run for president in 2004, at least four years ahead of schedule. George W. Bush is said to be looking forward to the campaign so that a Bush can finally have a victory over a Clinton.
AI
