A TOUGH CALL
Surprise events made 2016 Wall St. forecasts...
Nobody saw 2016 coming — especially not Wall Street.
Trump, Brexit, the Fed and Dow 20,000 (almost) — most everything that’s roiled or rocked the markets in the last six months of this unpredictable year was missing from Wall Street’s forecasts, according to a review of 2016 outlook research papers.
Every year, banks and independent research companies release reports predicting the major trends for the next 12 months to caution investors about buying opportunities and hidden market dangers.
Making predictions for a whole year out is “extremely difficult,” Chad Morganlander, strategist at Stifel Nicolaus, told The Post.
“There are thousands of variables that can change the direction of the movement within the financial markets.”
Here’s how the banks fared in their predictions:
The Fed: Major banks were too hawkish on the Fed, with most predicting that Chair Janet Yellen would hike borrowing costs three or four times throughout the year.
Goldman predicted the central bank would raise rates to as much as 1.5 percent by the end of the year, according to its outlook. Bank of America predicted “three or four 0.25 percent increases in each of the next two years.”
In reality, the Fed hiked once, to 0.5 percent.
Politics: In hindsight, it’s one of the most notable things the reports didn’t mention.
The US election and the UK’s vote to leave the EU — known as the Brexit — are almost absent in the reports of the six largest US banks, a signal they weren’t a major concern for Wall Street’s prognosticators.
Those events, as well as the Syrian refugee migration, are lumped into a single sentence in JPMorgan’s outlook: “Political risks are also a lurking concern, particularly the UK referen- dum on EU membership, the European migrant crisis and the general election in the US,” the bank said.
The Almighty Dollar: Banks were generally right that the dollar would strengthen by the end of the year — but they were wrong about why.
Wells Fargo said that the dollar would strengthen as the Fed raised rates, as well as with a stronger economy.
While the dollar has risen 4.4 percent this year against the euro, most of those gains came after Trump’s election, and are based on optimism about tax cuts and infrastructure spending, Morganlander said.
Stocks: With the S&P 500 reaching 2,262.53 on Monday, the index is on pace to end the year more than 10.7 percent higher than it started.
BofA predicted that the index would rise above 2,200, while Goldman’s chief economist, Jan Hatzius, was too bearish — calling 2,100 for the year, barely up from where it started.
“We have no idea,” Bespoke Investment Group wrote at the top of its 2016 outlook.
“In all honesty, though, to try and look out one year from now and tell people what the market will or will not do is a fool’s errand.”
Analysts like Goldman’s Jan Hatzius (inset) failed to earn their stripes this season. They missed their calls on financial targets and political events like the S&P 500 and the US election.