Forecasts - we get it wrong - a year-end reminder

At the end of the year, Wall Street makes annual predictions. Wall Street is a prediction machine. Markets are in the prediction business through expectations embedded in prices. Yet, the judgement or value in these predictions is poor. Just look at the predictions of the stock market.  Surprisingly, the stock predictions are more conservative than reality.

For the bond markets, the futures prices are a poor forecast of future rates. During the QE period, markets expected rising rates that never occurred, and more recently, the markets were not able to predict the Fed rise in rates. Now, the forward prices are expecting strong declines. if the past is a predictor, don't bet on it.