NEW YORK (CNN/Money) -
It's been another bad stretch for the high-profile Wall Street seers.
Six months ago, the consensus forecast was that the economic recovery would be in full swing by now; that the Fed would have started raising interest rates; the earnings slump would be over; and the major stock indexes would be higher.
None of that has played out, of course. But not everyone got it wrong. Here's a few of the forecasters who made the right calls, and what they're saying now.
Rory Robertson, interest rate specialist at Macquarie Holdings
Back in January, Fed watchers clamored to forecast when central bankers would hike interest rates to keep a recovering economy from overheating. May, said the optimists -- June at the latest.
Rory Robertson, chief strategist at Macqurie, an Australian investment bank, wasn't one of them.
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| Rory Robertson |
"My best guess remains that the Fed will not raise rates in 2002," Robertson told clients on Jan. 29 as he fretted about an economic recovery too weak to create jobs. "A long slow grind back to economic health, with GDP, jobs and profits growth all disappointing the current consensus."
Flash forward a few months: In May, U.S. employers added just 41,000 new jobs, about half of forecasts, following a downwardly revised gain of 6,000 in April. And it looks like the June quarter will market the sixth straight quarter of earnings declines.
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More from the first-half round-up
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Speaking recently, Robertson stands by his call for no rate hike this year. And he even thinks that the next move could be lower if jobs growth remains weak and stocks keep falling.
More of his colleagues are starting to agree. The latest Reuters poll found that three of 22 primary dealers of Treasury securities -- UBS Warburg, Credit Suisse First Boston and CIBC World Markets – say the Fed is on hold until 2003.
Stephen Roach, economist Morgan Stanley.
The double-dip recession Roach forecast made in a Jan. 7 New York Times article may not have happened -- yet.
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| Stephen Roach |
At the time, the economy was in an upswing, but Roach thought it would "dip" back down because the increase in manufacturing wasn't sustainable, and because companies would not ramp up hiring. Only after a final purge of inventory could a full recovery take place, he said -- after all, that's how it happened in the last five of six downturns.
"It hasn't played out exactly as I though it would," Roach said recently. "But the vulnerability of the economy remains very much on the front burner." Looking forward, Roach stands by the double dip forecast. He does so at a time when the case for the vigorous economic upturn is much harder to make. He believes only the consumer will prove him wrong.
"And the consumer is vulnerable and ripe for a fall," said Roach.
Tom McManus, Banc of America Securities
At the outset of the year bulls abounded on Wall Street. Some strategists were downright euphoric. Ed Kerschner, of UBS Warburg, predicted the S&P 500 would rise to 1,570, a 37 percent gain.
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| Tom McManus |
Tom McManus stood out with a relatively downbeat 10,400 target for the Dow -- a return of less than four percent. His recommendation that investors keep just 55 percent of their money in stocks was one of the lowest on the Street. And he predicted sluggish earnings growth.
"A third consecutive down year can not be ruled out," McManus said at the time.
Even though stocks are much lower now, he's no more bullish. He still recommends investors put just 55 percent of their money in stocks and thinks stocks have further to fall.
The trap that a lot of investors fell into at the beginning of this year, says McManus, is thinking that just because stocks hadn't fallen for three years in a row since 1941 that they wouldn't do it this time around. But "the amount of altitude you fall is a function of how high you fly," he says, referring to the unprecedented gains of the 1990s.
McManus suspects stocks will be closer to their ultimate bottom sometime in the fall. "I anticipate that I'll be heavier in stocks at the end of the year," he says, "because I anticipate being more correct."
And if you're sick of listening to high-paid strategists...
Finally, we've got to give the nod to two indicators that always seem to trump the highly-paid strategists. First, there's the Superbowl indicator. Stocks have almost always fallen after a Super Bowl victory by a member of the original American Football League. But when the New England Patriots (an AFL team) won this year, most optimists thought for sure the indicator would be wrong in 2002. So far, the indicator is holding up.
That's not all. Three days before the Super Bowl, the market ended lower in January. Since 1950, performance in January has predicted the course of the year 80 percent of the time, according to the Stock Trader's Almanac.
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