Well, another year is upon us and TMM are back in the saddle. We cannot say that we bid farewell to 2011 with nostalgia, a year whose effort/reward ratio was very high for TMM. And while quite a few of our macro calls went wrong, in the event, managing to catch a few big market turns helped rescue our years, leaving us sitting in modestly up for the year and above the average performance of the Macro peers. While nothing to shout about, TMM will take that as a win, giving the drubbing taken by global asset markets & hedge funds in general.
Now, time to mark TMM's 2011 Non-Predictions...
1. Iron ore will NOT be trading higher on Dec 31st than it is on Jan 1st.
HIT. Both equities involved in the space and physical traded off heavily. A Chinese tightening cycle plus capped upside on supply kept iron under pressure for most of the year and it collapsed with all things risk in August & September as Chinese property measures began to bite and steel traders were caught long inventory.
2. Rare earth metals will NOT come down to earth anytime soon and Tungsten won't either.
HIT. TMM count this as a win, but it would have been a much bigger win in July. Rare earth export restrictions have been weakening, though spot Neodymium & Dysprosium are still up big on the year. Fundamental scarcity now has to be weighed against substitutes like induction motors replacing direct drive.
3. Copper is NOT Coming Down Anytime Soon.
MISS. TMM did cut their copper position in February, but feel it is appropriate to judge by the letter of their Non-Prediction rules, and will thus mark this as a MISS. A structurally very tight market that loosens 5% can fall a long way very fast, much as did other top metals picks of January 2011, including Platinum & Palladium.
4. WTI NOT going to be under $100 for Long.
HIT. WTI had a huge run into the Arab Spring, collapsed but finished the year handsomely up. Tough trading, but for strong of stomach and margin this one paid. As of today, it feels like groundhog day in the Middle East and in crude.
So TMM score 3/4 in their Commodities Non-Predictions.
Moving onto Equities:
5. SPX will NOT trade below 1150.
MISS. While this Non-Prediction looked good for the first half of the year, the debt ceiling shenanigans & US double dip scare (for the second year running) sent the S&P500 to an intraday low of 1076.8 in early October.
6. The DAX will NOT outperform the IBEX.
HIT. A trade that worked well for TMM early in year, with the DAX underperforming the IBEX by 11% in Q1, before further oscillations & consolidation throughout the year.
7. Emerging Markets (MSCI EM) will NOT Outperform Developed Markets.