2012 Of The International Alligator Vision: Hate European Debt, Love The Dollar.

2012 is coming. What do you want to do most?

In the 2012, most value investors had a clear view, which was concentrated on European debt.

They believe that due to the uncertainty of the handling method, the risk of European debt crisis is further aggravated.

At the same time, they think they should avoid European debt and invest in related assets of the US dollar or other emerging countries.

As Barcelona and Real Madrid are rivals, European debt is still a nightmare for most value investors in 2012, such as Warren Buffett and Jim Rodgers.

For example, if you buy 3 - year Italy treasury bonds at a price of $120, the corresponding yield is 5.5%.

One possibility is that if you hold the maturity, the Italy government bonds may become waste paper due to the government's default.

This is only an extreme point of view why the big crocodile does not like European debt, but everyone has different reasons.

Speaking of Buffett, he said in November 2011 that he was willing to invest in Japan and the United States, but did not intend to make any direct investment in Europe.

He believes that the euro system has major flaws and needs new arrangements. It is not clear when the European debt crisis will end, so it hopes to clear away its European bonds.

Reporters found that although Buffett later claimed to be interested in investing in a European company, it has not plated into action today.

Instead, Buffett recently spent more than 2 billion dollars to buy solar power plant in central California, the first solar energy equipment company.

Facts have proved that, compared with European enterprises, "

Rodgers, known for investing in commodity markets, is also very unhappy with Europe in the 2012.

Rodgers believes that there are some bad and bankrupt countries in Europe.

Due to the lack of a unified financial system, the eurozone member states can not form a unified crisis response mechanism.

At the same time, introducing Euro bonds and raising the EFSF (European financial stability fund) is also a bad move, which makes European politicians have greater freedom of spending, which will only make things worse.

If Europe worsens, or consider buying more dollars.

It is worth mentioning that Rodgers said in November that as the European debt crisis and the US debt rating were downgraded, it would have a great impact on the global economy. The stock market in China and the world in the next 2~3 years will be

In fact, it is also reasonable for predators to look at European debt so empty.

On the one hand, the fiscal and credit crunch is likely to drag down the euro area economy in 2012; on the other hand, the new EU treaty is only in agreement with the fiscal unification in the framework, but many key issues, such as allowing the European Central Bank to increase the scale of the purchase of debt or granting EFSF bank licences, are met with strong opposition from Germany.

As a result, once the Italy or Spain bonds fall into default risk, the existing 440 billion euro rescue fund is only a drop in the bucket.

In the end, Europe can only rely on Germany or the European Union.

Reporters learned that the world-renowned financial channel CNBC commentator PatrickAllen also empty Europe.

His reasons are: first of all, the European debt problem will become worse, because the European Central Bank and the European Union are not acting as a result of the liquidity crunch. It is expected that a real crisis will erupt in January 2012.

Secondly, many banks with poor capital will fail or be taken over by the government. As a result, the private sector to the public sector will suffer from the impact of the 2008 Lehman crisis.

The only question now is who will act as the 2012 AIG.

At the same time, the EU will play its role at the last minute, such as Germany's signing of trillions of Euro stimulus bills.

Finally, only those big banks can survive.

Let's take a look at the prediction of PIMCO, the largest bond broker in the world.

It is reported that the company's global asset management President ScottMather predicted that the euro could fall to 1:1 against the US dollar next year, which means that the euro still has a 23% drop in space.

There are many reasons, including the deepening of the recession, the breakdown of the euro zone, and the debt default of the euro zone countries outside Greece.

However, if the ECB can adopt quantitative easing policy and buy large quantities of Italy and Spain bonds at the same time, it may stimulate the short-term rise of the euro.

Reporters noted that Gordon, the head of asset management at PIMCO emerging market, once revealed that because of the very low valuation, the stock market of raw materials and industrial enterprises in the new market countries is selectively increasing the potential risks.

From this perspective, the outbreak of the new round of European debt crisis is only a matter of time.

The reporter noted a dangerous signal: from the March 2009 season of the Dow Jones industrial index, from the beginning of March 2009 (when the Federal Reserve formally launched the QE1), there were only 2 times the highest season below the previous quarter, the third quarter of 2010 and the third quarter of 2011.

In the fourth quarter of this year, the highest point was 4% lower than the previous quarter, which is likely to happen for the third time.

Coincidentally, the Fed also hinted at the QE2 in the third quarter of 2010.

However, judging from the current situation, there is still greater uncertainty (fear of inflation) for the QE3 to launch the Federal Reserve.

In other words, if there is no QE3, the Dow Jones industrial index can get the liquidity support at the current level, which will face a great challenge.

So what are the most likely risk events in 2012? Deutsche Bank's forecast gives the answer.

The second biggest risk is the financing crisis in Italy and Spain. It will threaten the European and even global financial system. The third risk is the credit downgrade of the United States, which will lead to the downgrade of the US bank. The fourth risk is that China will have a hard landing. The fifth risk is that the French rating will be downgraded, which will have a negative impact on EFSF and financing. The sixth biggest risk is that European banks continue to leverage, the way to deal with them is investment cyclical industries. The seventh risk is that commodity trade finance suffers from liquidity tightening. The eighth risk is accompanied by the influx of funds into US Treasury bonds and German bonds, and the loss of risk assets. The ninth risk is that the expansion of the US pension fund deficit may result in a decline in corporate profits. The first risk is that Greece is out of the euro zone, which will lead to massive write downs, capital controls and peripherals of private sector assets.

{page_break}

It is interesting that Soros, as a visionary investor, is somewhat puzzled about European debt.

On the one hand, he has been claiming that the global financial system is collapsing, and the developed countries are falling into a deflationary debt trap and urging the ECB to intervene and issue Eurobonds.

On the other hand, he bought $2 billion in European debt at the end of November, including the Italy treasury bonds due in December 2012.

If Soros really sees empty European debt, the only reason he can explain his buying behavior is that he is willing to take risks to sell in the two tier market, but this requires a high liquidity, or he shortens the same scale European debt to lock down the profit margin of 5%.

Then, after the prospect of European debt becomes clearer, the side of the operation error will be lighten up.

Zhang Lei, senior macro researcher at Minsheng securities, told reporters that 2012 was the year of the European debt test, because the PIIGS (European pig five) short-term debt outstanding will expire in 2012.

At the same time, the debt maturity of Italy and Spain exceeds 20% of its total foreign debt, and the ability of short-term debt repayment has increased sharply.

PIIGS+ Germany and France mature debt obligations and up to 894 billion 310 million euros.

The euro zone exit mechanism is difficult to achieve. Quantitative easing is still the only way to save the euro.

In addition, the probability that the US launched QE3 in 2012 was low; the euro zone quantitative easing helped European debt, liquidity was mainly absorbed in the region, and the global liquidity spillover effect weakened, which was favorable for global inflation pressure to ease.

It is expected that the euro will fall to 1.2 against the US dollar in 2012.

Recommendations: the United States and emerging markets or "profitable".

Since 2012 is so hard, how can we deal with the problem in order to avoid the annoying "black swan"?

Reporters found that Goldman Sachs recently made a forecast for 2012, including the slow growth of the developed economies in more than 2 years, compared with the resilience of emerging markets.

The euro area GDP is expected to grow by 0.8% in 2012, which is similar to the most difficult period in the currency crisis of 1992~1993.

As a result, European and American stock markets will face difficulties.

European stock market is expected to drop 16% in the next 3-6 months, then slowly rebound to the current level.

The S & P 500 index will be slightly concussion in the next 12 months.

By contrast, Asia's stock market other than Japan may rise by 14% by the end of 2012, which is optimistic about China's performance.

In terms of money, because investors will choose bonds, the dollar will fall sharply, and crude oil will rise.

Finally, it is expected that the Federal Reserve will launch QE3, while the United Kingdom will increase its purchases of treasury bonds.

According to Peng Bo, Goldman Sachs reported six major investment proposals in 2012, including the recommendation to use MarkitiTraxxCrossover index to track the change of credit default swap in 50 European high-yield companies, to buy insurance for European junk bond defaults; to do euro for Swiss francs, to target 1.35; to suggest shorting German 10 year treasury bonds, and to predict that the yield will rise to 2.8%; to do more Canadian stocks and Japanese stocks; to do more Malaysia ringgit and the renminbi to the US dollar; to do more July 2012 to expire Brent crude oil futures, with a target of 120 US dollars / barrel.

BobPisani, senior editor of CNBC, is optimistic about the US stock market in 2012.

It is reported that he believes that the global QE will arrive in early 2012, including Europe, the United States, Japan and so on.

Due to the eye-catching performance of US economic growth in the 4 quarter of 2011, considering that this step is likely to be maintained in the first half of next year, it is expected that US stocks will outperform European and other regional stock markets next year. In bond market, editor GaryKaminsky believes that monetary easing will further push down the yield of us 10 year treasury bonds in 2012.

In addition, at least 3 well-known hedge funds will be closed due to bad performance. In terms of money market, CNBC moderator BrianSullivan believes that the US will avoid recession in 2012, because recent data are better than expected, including employment and real estate market.

In Europe, the euro zone rescue fund will rise to $2 trillion, because the debt crisis is far from over.

The euro is expected to fall against the US dollar to 1:1.

The US stock market is likely to rise by 5%~8% over the same period.

It is worth mentioning that CNBC senior energy reporter SharonEpperson expects gold to rise to $2400 / ounce in 2012.

The reason is that as long as the real interest rate does not rise before mid 2013, investors will put money in the gold alternative currency.

In addition, due to the balance of oil supply and demand in the Midwest of the United States, the price difference between Brent and WTI is expected to drop to a record low of about 3-10 dollars.

And benefit from seasonal factors (high probability of 3~5 per month per year), retail gasoline prices are likely to rise to more than $4 per gallon, thus approaching the record high of 2008.