5 'Bold' Predictions For 2016

In a new report, Cup & Handle Macro analyst Michael Lingenheld revealed five bold market predictions for 2016. Here’s a breakdown of his list.

1. Revolution in a major emerging market

Lingenheld believes that South Africa is the top target, but names Turkey, Indonesia, Malaysia, Saudi Arabia, Ukraine and Russia as other possibilities. All of these countries are currently suffering from large debt burdens, poor leadership and high youth unemployment.

2. Bitcoin outperforms all fiat currencies

Lingenheld made this same prediction prior to 2015, and it came true. Bitcoin gained 35 percent in 2015, and he sees no reason why the cryptocurrency won’t outperform again in 2016.

3. A major currency peg will break

Lingenheld notes that the IMF’s annual review of currency regimes revealed than only 35 percent of member countries let their currencies float as of the beginning of 2015. He adds that Middle Eastern countries suffering from low oil prices are top candidates, including Saudi Arabia, Kuwait and UAE.

“Bringing down any of these pegs would be a major macro story, but a free-floating or devalued Hong Kong Dllar would be a monumental development,” Lingenheld explains.

4. Corn and wheat will each rally at least 20 percent

Global stock-to-use ratios are at 16-year highs, and low gas prices have been a major boost for farmers. However, Lingenheld is not convinced that crop prices are high enough to drive a huge planting season in the spring.

5. A unicorn company will go bankrupt

Lingenheld sees a shift in market enthusiasm for new tech companies, including the disappointing Square Inc SQ IPO pricing. He believes that the reality of competing with big tech companies like Alphabet Inc GOOGL, Apple Inc. AAPL and Amazon.com, Inc. AMZN will start weighing heavily on smaller unicorn companies and their investors.

Disclosure: the author holds no position in the stocks mentioned.