We are at the first anniversary of my attempt to fit an annual missive into the shoes of Byron Wein’s’10 Surprises’ investor letters. Byron’s annual letter gave his predictions for financial markets and the global economy which he believed had a higher probability of occurring in the coming year, yet were not widely anticipated by the average investor.  This is a list of surprises that are not expected to happen, so are not investment advice, so are aimed to challenge conventional wisdom and provoke deeper thought among investors.

We will start with a review of my 10 surprises from last year, rating them a +, =, or – based on the outcome:

1. Global equities post double digit returns for the year – this one was a solid A+.  To put this in perspective, analysts overall were very cautious about 2024’s prospects. Financial markets typically confound the majority, 2024 was no exception by posting one of the best annual performances during a US presidential election year.  Even Hong Kong and mainland China participated in the rally (see point 6 below).  While the S&P500 posted a very strong +24 per cent gain, the situation ex-Magnificent Seven shows a less bullish picture: the equal weighted S&P500 only gained 7.8 per cent.
2. The interest rate hike cycle ends, but instead of cuts, rates stay at 5 per cent for most of the year – another +, though we did get a few rate cuts at the end of the year. At the beginning of the year economists were pricing in six rate cuts, an excessive level that I opined would only have occurred in a recessionary environment.
3. Gold becomes the best performing asset of 2024 – another solid A+. Gold rallied 26 per cent, beating global equities and bonds.
4. Ukraine and Middle East conflicts end – this one’s a negative. Both conflicts are sadly still ongoing.
5. Uranium extends this year’s price gains – this one was mixed. Uranium spot prices gained over 20 per cent in the first month of the year, but then gave it all back and ended up losing -16 per cent. Cameco, the world’s largest uranium mining company, however gained +19 per cent.
6. China equities rally – this one turned out to be correct, defying investors’ expectations. China finally announced a set of stimulus measures in September, causing a big rally in Hong Kong and mainland China equities. While half of the gains were given up soon after, returns for the year were still strong at +18 and +16 per cent respectively.
7. Japanese equities make a new all-time highs – another plus.  Japan made fresh all-time highs in the summer, but was very volatile in the second half as the Yen strengthened on the outlook for higher interest rates. Performance was a solid +19 per cent.
8. Latin American assets (both equities and bonds) outperform – this was mixed. Brazil’s stock market lost almost a third of its value in US dollar terms, while its bonds were flat. However the standout performer was Argentina, on the back of Milei’s election, where equities gained 62 per cent in dollar terms, and the 10-year USD sovereign, despite being rated CCC+, gained 155 per cent.
9. EV batteries get shaken up by alternatives to lithium-ion – this one’s a mild positive.  Lithium spot prices continued to fall, and major lithium miners also suffered falls of around a third of their value.  Alternative batteries are still in the works, but haven’t been commercialized yet.
10. Weak US housing confidence – this one’s a miss. Housing prices in the US remained firm despite higher mortgage rates.

The results of last year’s 10 surprises was a surprise in itself, with many of them hitting the mark, especially since these were non-consensus trades. Looking back it was easier to do this list last year, as deep investor and forecaster pessimism often results in strong stock market performance. Looking forward this year, forecasters are back to a ultra-bullish outlook. This year’s list of 10 surprises will surely not hit the mark as well as last year’s.

Here's my list for 2025:

1. Most of Trump’s tariffs do not get implemented, being more of a negotiation tactic. Risk assets in countries seen as the most affected rally: Mexico, China, and Canada.
2. China real estate prices bottom, Xi and Trump conclude a ‘Grand Bargain’, causing animal spirits to reignite with mainland China and Hong Kong equities to be one of the best performing markets in the world. Consensus view remains that China’s debt problem is too large to be fixed and will require many years of deleveraging.
3. Global inflation remains sticky. The US economy doesn’t get down to the Fed’s 2% target and rate cuts stall at the 4% area. The Fed hikes in the second half of the year.
4. China starts competing with the US in dollar bond issuance, following its successful debt issue in Saudi Arabia. This leads to a number of weak US treasury auctions, causing investors to question the ability of the US government to plug its growing deficits.
5. Gold continues its bull run, again being one of the best performing investments in the world, as central banks continue to increase their purchases.
6. Trump negotiates an end to the wars in Ukraine and the Middle East, and takes full credit for it.  In the 2025 APEC conference held in Singapore, he announces the lifting of sanctions against Russia (this would really be a surprise!).
7. AI stocks start to under-perform as investors question the large energy and capital expenditure requirements.  Investors shift their attention to quantum computing instead.
8. Crypto sells off as Trump’s strategic bitcoin reserve doesn’t happen; bitcoin falls below the previous $60,000 peak.
9. Japan embarks on a multi rate-hike cycle, but after an initial sell-off, equities ignore the higher rates and continue higher.
10. US equities end their decade-long outperformance vs. rest of the world, with Europe and Emerging Markets outperforming.

As a reminder, none of the above is investment advice. They are meant as a challenge to conventional wisdom for potential events that are not taken into consideration by most investors.