Investment strategists have been busy putting together their 2013 outlooks over the past few weeks, detailing their thoughts on how the year ahead will look from a market perspective.
A few, like Deutsche Bank's currency strategy team, have also gone outside the box to consider the types of events that could actually surprise markets next year.
The Deutsche Bank team sums up the point of the exercise succinctly:
When thinking about the year ahead, it is tempting to extrapolate the recent past whether looking at risks or one’s base case. Moreover, there is a tendency not to deviate too far from consensus, perhaps seeing safety in being part of the herd. From a statistical perspective, this is very similar to assuming markets follow a normal or Gaussian distribution. That is, markets are well behaved and extreme outcomes are rare. The financial crisis of 2008 taught us otherwise, yet it is very difficult to shrug off the bias to assume normality in markets.
With this in mind, they offer a list of big "outlier" events that would surprise us.
The Federal Reserve begins buying stocks as an unconventional monetary policy measure
"With the US housing sector apparently turning the corner, stronger equities may be the necessary tonic to further increase household wealth, and also to boost investment...While the Fed does have restrictions on what assets it can buy, it can invoke Section 13(3) of the Federal Reserve Act that allows more extreme actions in 'unusual and exigent circumstances.'"
Source: Deutsche Bank
Greece discovers gas reserves worth more than all of the debt it owes
"Greece has sizeable undersea terrain in the Mediterranean, and several Mediterranean countries have already discovered and are exploiting undersea natural resources, most notably the Levantine gas field between Israel and Cyprus. A number of studies that have looked at similar gas finds in the Mediterranean as a basis of comparison put the potential size of gas fields to the South of Crete as high as $600bn."
Source: Deutsche Bank
Sweden, Turkey, and Brazil bring peace to the Middle East
"Carl Bildt of Sweden, Ahmet Davutoglu of Turkey and Antonio Patriota of Brazil have talked about their interest in helping solve challenges facing the international community based on their common values of dialogue, multilateralism and democracy. In the past, Brazil and Turkey have attempted to resolve the nuclear issues in Iran, while Turkey and Sweden have worked together on issues in the Balkans...their attention could once again turn to the Middle East."
Source: Deutsche Bank
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