The dollar isn?t likely to see a strong rebound this year, according to two widely respected financial analysts.

It is also anyone?s guess what will happen with the price of oil ? with one analyst predicting further spikes to already record prices in 2004 while the other believing the cost of a barrel of crude could skydive to below $30 in 2005.

Otherwise, predictions for financial markets in 2005 are that growth may slow and returns may not reach 2004 levels, but all in all the economy will remain strong.

This was the story painted at this year?s fourth annual forecasting dinner, a popular event hosted by the Bermuda Society of Financial Analysts. As with the previous year, this year?s event was hosted at XL House and drew a packed house of 120 of the brightest minds from the Island?s investment community.

There was a little twist this year though. The event normally carries the tension of one bullish forecaster being pitted against an investment professional with a much more bearish outlook on what is going to happen for the year in the financial markets. This year, both forecasters were undeniably bullish on investment prospects in 2005.

Of course, the fact that this year?s analysts ? both professionals from the world?s financial markets capital, New York City ? were bullish on 2005, doesn?t mean they agreed on everything.

There was one sticking point ? the price of oil in the coming year. That, and only one predicted that Elvis would land on Mars this year, putting to rest any thought that financial analysts take themselves too seriously.

The evening?s first speaker, Alexander Farman-Farmaian, said he expected oil prices would continue to rise in 2005.

Mr. Farman-Farmaian may know a thing or two about what is likely to happen on the oil front, saying he was a ?little biased? as an Iranian whose father helped found OPEC. He said h had spent some of his growing up years in Venezuela, and that he still had business interests there. To that end, he predicted that Venezuelan leader Chavez, and other oil-rich countries, would be selling to the highest bidder.

He said China was going to Venezuela and Brazil to secure oil, and was looking at the long term.

?They are trying to lock up supply and you don?t do that unless you think you need the supply. Demand is strong, supply hasn?t been the best and the Chinese keep coming ? they keep coming.?

Although he did not expect higher oil prices to have the same impact as there had been in the 70s and 80s when oil prices took a huge bite from consumers, Mr. Farman-Farmain said it was still being felt in some wallets but to a much lesser degree.

He said that while the ?white collar chappy? did alright in 2004, the blue-collar trucker felt a real pinch from rising oil prices.

He said he expected to see this continue to some level in 2005.

One reason he said he felt that pricing would continue to rise this year was because oil companies have failed to pump money into infrastructure, painting a picture of oil rigs beginning to crumble from rusty pipes.

?This is something that should not be underestimated,? he warned.

He predicted that the price of a crude barrel of oil in 2005 could reach as high as $60.

Mr. Farman-Farmaian said car manufacturers in India and China were seeing strong growth, and while the Chinese said they were going to put the brakes on growth, this was not really happening, and the country was seeing a growing middle class. He said as Chinese incomes rose, people would begin to buy ?colour TVs and airconditioners. You move up from the bicycle to the moped, from the moped to the car. And it does not go in a linear function, it goes in a geometric function. What we underestimate is this giant [China] that has finally woken up and it isn?t small. It is the same thing in India.?

The night?s second debater, Michael Thompson said he ?fundamentally disagreed? with Mr. Farman-Farmaian?s views on oil.

?The only thing I?m bearish on this evening is the price of oil,? he said, adding that any rational person?s knowledge of the fundamentals would make predictions of continued price increases for oil ?preposterous?.

?Oil is probably going to go down to $28 to $30,? he said, predicting the movement on oil was likely to begin soon.

?We think oil is going to save the consumer. The consumer is just about tapped,? he said, adding that the ability to refinance on home mortgages last year had been a boon for many but higher consumer prices, especially oil, were putting a squeeze on consumers.

Mr. Thompson said his views on what happened with oil were closely tied to the fact that supply was increasing at the same time as GDP growth was increasing.

He also spoke of oil pricing being tied to the growth of wealth in China, but he predicted that the power of the Chinese middle class had been over-estimated and certainly was not going to result in this kind of surge in consumer buying power in 2005. He said the real driver remained the US.

He added that if ?things continue to go well in the Middle East, [oil supplies] will be more reliable and more will pumped?.

What both forecasters did agree on is that OPEC has never been very good at holding its members to promised production levels.

Oil aside, there was not much else that Mr. Farman-Farmaian and Mr. Thompson widely disagreed on ? and they were on the same page when they said the story this year is that there is money out there looking for an investment home.

Mr. Farman-Farmain said the theme for 2005 was ?liquidity; lots of liquidity? driving investors to accept less returns on their money relative to risk, especially when it came to short-term money.

Mr. Thompson said in the last year, ?we saw something that we have only seen five times in the last 50 years. That was four consecutive 20 percent plus quarters in earnings growth for the S&P 500. These companies are minting money.?

But he said the anomaly was how the market had reacted to events.

?It sure doesn?t feel like judging from behaviour in the open market. You sit there and think what a garbage year these stocks had, with the exception of a few sectors: basic materials, energy, information technology.

?If someone said to you five years ago that where you want to be is basic materials, they would have shot you or locked you up.?

But he said this sector had been growing ?north of 70 percent for the last few quarters?.

For 2005, Mr. Thompson predicted slower earnings growth for equities, down by half to about nine to ten percent.

But he said the fact that companies were ?sitting on loads of cash? was prompting a trend noticed by a unit of Thompson Financial late last year, namely increased activity from buy-out firms.

Based on that, he said Thompson Financial had been advising in recent months to watch for merger and acquisition activity. He said a good example had already happened with Proctor & Gamble taking over rival firm Gillette, ?after 50 years of slugging it out?.

He said the real story behind increased M&A activity was that corporations think the economy is sound enough for them to pull off major mergers or acquisitions.

He said investors should be focusing on valuation in 2005. ?Growth goes down and valuation becomes the real driver,? he predicted. He said there was a real reason for investors to now re-focus on equities.

?If you play the commodities game, copper of all things is going to be the thing going up. People don?t realise the demand for copper globally.?

He said a lot of copper-producing countries had taken their manufacturing offline temporarily because of a belief there would be higher prices coming.

?We are probably going to see their bet come to fruition in 2005,? he said.

Mr. Thompson said that in the last 20 years the historical average growth for S&P companies was about seven percent. He said that according to Thompson FirstCall information, growth was going to be just shy of 20 percent, making this the best year since 1992 in terms of corporate profit.

?So, why do people hate equities,? he asked, saying the markets had shown ?lamentable? performance.

?This is what a lot of us here [at this dinner] get paid to do, to stretch our minds and figure out why this occurs? he said.

?There is just not enough paper out there....All this diverse cash is going to be chasing any opportunity. Where do you go? I can?t see another place to go but to equities,? he said.

Mr. Farman-Farmaian concluded there was little besides another terrorist attack of the scale and magnitude of the September 11, 2001 attack, that could throw off the good trends expected in 2005. Although Mr. Farman-Farmaian said another terrorist attack might not have the same impact as the 9/11 event, it could still throw things off course.

Right now everyone is doing well. I don?t see a recession. It would be hard to derail this,? he said.