2011 - Predictions ( Financial )

Re: 2011 - Predictions ( Financial )

Postby winston » Fri Dec 24, 2010 6:08 am

5 pages of bed-time reading. Yawn Yawn ...

Outlook 2011 By KOPIN TAN

Our group of investment experts sees stocks continuing their climb next year as the economic recovery takes root.

"THERE'S A GROWING SENSE that not every problem will be enough to topple the market," says Jeff Knight, head of Putnam Investments' global-asset allocation.

"THE ECONOMY IS MOVING in a way that should cause confidence to improve, and that will affect everything from hiring to dividend payouts to consumer spending and equity-mutual-fund flows," says David Kelly, JPMorgan Funds' chief market strategist.

WILL MAIN STREET SHARE
Wall Street's enthusiasm?

INFLATION MAY ALSO THICKEN the plot by that time.

SOME THOUGHTS on the strategists' sector selection:

• Technology is favored by eight of our strategists and shunned by none. The beloved sector can seem sexy and safe at the same time -- it's hitched to business spending and global growth, holds the allure of improved productivity for cost-conscious employers, and is backed by the deepest pockets. But is it becoming a crowded trade? Many individual investors burnt by the tech bubble are still wary, but when they start coming around, be careful.

• The new pariahs are utilities and health care, which between them amassed 12 disses and just one nod. Contrast these with energy and industrials, each favored by five strategists and avoided by none.

• Given the uncertain pace of the housing-market recovery, banks' exposure to sovereign debt problems, and the fragile state of consumer confidence, most strategists are neutral on the financial and consumer-discretionary sectors. The few who weighed in are split.


http://online.barrons.com/article/SB500 ... rticle%3D1
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Re: 2011 - Predictions ( Financial )

Postby winston » Fri Dec 24, 2010 10:30 am

Annual Forecast: My 2011Outlook For The Stock Market By Michael Lombardi

Since March of 2009, the stock market has rallied 79.5%. Bottom line: the past two years have been a dream for stock market investors.

But all good things eventually need to come to an end. Let’s get realistic; we will not see a 79.5% rally in stocks over the next two years. The easy money in the stock market, as they say, had been made.

The biggest threat for 2011 will be rising interest rates. Now, this shouldn’t scare my readers away from stocks immediately. If we look back throughout history, stocks have risen contemporaneously with interest rates for periods of six to 12 months before they have changed direction and gone the opposite direction of interest rate trends.

So, looking at 2011, I’m bullish for the start of the year. I still like these stock groups: retail; gold; oil; technology; and leading-edge health companies. I’m staying away from the real estate stocks and the utility stocks.

Right now I’m bearish on stocks for the second half of 2011, as I see rising interest rates catching up with the stock market by then.

Sometime in 2011, the bear market rally that started in March of 2009 will come to an end. I’ll try my best during the year to time our exit from stocks just right.


http://www.dailymarkets.com/stock/2010/ ... ck-market/
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Re: 2011 - Predictions ( Financial )

Postby winston » Fri Dec 24, 2010 10:46 am

The Waves Of 2011 By John Browne

One of the founding myths of the modern global financial system was that governments, especially of the developed democracies, could borrow endlessly without consequence.

But, with sovereign debt crises erupting across the globe, it appears that the umbrella of perceived safety has gotten smaller, exposing some benighted countries, like Greece and Ireland, to severely rough weather.

The big question is: has the umbrella stopped shrinking, or will other countries soon face similar decisions?

First, international investors are beginning to become net sellers of sovereign debt. Even the mighty United States is finding that, despite the Fed’s rounds of massive quantitative easing, in which the Fed has bought outright hundreds of billions of dollars of US Treasuries, yields are still rising. In other words, the private and foreign selling pressure is stronger than the Fed’s buying pressure.

Second, the credit agencies, stung by their failure to warn investors about the banking crisis, are now emboldened enough to threaten the triple-A ratings of member states within the EU, and even of the United States itself – now the largest debtor in the world.

Third, there is considerable and growing political pressure on governments to cut spending. There is a growing awareness among Western voters that government largesse can’t be maintained forever, and that it will likely cost the next generation if not the present. Many pet spending programs, including defense, healthcare, welfare and even public pensions, are getting ready for haircuts – if not scalpings.

Meanwhile, Chinese inflation is beginning to drive the international agenda. In order to keep a lid on this growing problem, China will soon have no choice but to revalue its currency, the yuan, higher.

A yuan revaluation requires a devaluation of other key currencies, most dramatically the US dollar, but also the pound sterling and euro. This will raise prices for food, energy, and other necessities even in the absence of action by our central banks. Such an outcome will place further economic pressures on the developed West.

In conclusion, 2011 likely will open with a deepening recession, increasing austerity, and falling asset prices. If this is met by a new round of inflation creation and yuan revaluation, then investors should weigh whether to redeploy assets in anticipation of potential rising commodity prices.

I expect these developments not to happen gradually, but to come in great waves. Smart investors will tie their fate to an investment vessel with a solid hull, because in these seas, even a hint of rot could tear a ship asunder.

http://www.dailymarkets.com/economy/201 ... s-of-2011/
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Re: 2011 - Predictions ( Financial )

Postby winston » Sun Dec 26, 2010 8:35 pm

Mish: Ten Economic And Investment Themes For 2011 By Prieur du Plessis


1. US Municipal Bankruptcies Head to Center Stage

Look for Detroit and at least one other city in Michigan to go bankrupt. Also look for increasing discussions regarding bankruptcy from Los Angeles, Miami, Oakland, Houston, and San Diego. Those cities are definitely bankrupt, they just have not admitted it yet. The first major city to go bankrupt will cause a huge stir in the municipal bond market. Best to avoid Munis completely.


2. Sovereign Debt Crisis Hits Europe

The ECB and EU are hoping things return to normal and they can deal with things more calmly in 2013. The markets will not wait. Expect a new Parliament in Ireland to want to renegotiate whatever horrendous deal Prime Minister Brian Cowen agrees to. Portugal and Spain will need bailouts. The surprise play in Europe will be Italy, a country not on anyone’s front burner. Italy will come under intense credit market pressure, and when it does the whole Eurozone comes unglued. Europe’s banks are insolvent and ECB president Jean-Claude Trichet will have a choice, haircuts or massive printing.


3. Cutbacks in US Cities and States

With Republican governors holding a majority of governorships, with Republicans holding a majority in the House, and with a far more conservative Senate, there is going to be little enthusiasm for increasing aid to states. There will be some aid to states of course, but nowhere near as much as needed to prevent cutbacks. Expect to see a huge number of layoffs and/or cutbacks in services. Cutbacks in cities and states will be a good thing, but that will counteract other gains in employment. The unemployment rate will stay stubbornly high.


4. Public Unions Under Intense Attack

Public unions will face increasing hostility, not only in the US but also the Eurozone and UK. Look for Congress to consider legislation to kill collective bargaining. If it passes, the president would veto it. The problem however will not go away. Cities and states in distress will increasingly outsource every contract they can.


5. China Overheats, Multiple Rate Hikes Coming


China, everyone’s favorite promised land, has a hard landing. China will grow at perhaps 5-6% but that is nowhere near as much as China wants, or the world expects. Tightening in China will crack its property bubble and more importantly pressure commodities. The longer China holds off in tightening, the harder the landing.


6. Property Bubble Bursts Wide Open in Australia and Canada

Australia, having largely avoided the global recession runs out of luck this time around. Look for the Australian economy to fall into outright recession. Look for Canada to slow dramatically as its property bubble pops. The US property bubble is much further progressed, by years, than Australia, Canada, and China. This matters immensely.


7. US Avoids Double Dip

The tax cut extensions and the payroll tax decrease will keep the US out of recession. However, growth estimates are still too high. The tax cut extensions do nothing more than maintain the status quo while the payroll tax deduction is just for a year. Most will use it to pay down bills. Look for GDP at 2.0-2.5%. That is the stall rate.


8. Year That Something Matters

For the global equity markets, this will be the year that something matters. Certainly nothing mattered in 2010, and optimism for equities is at extreme levels. I have no targets other than a suggestion this is an extremely poor time to invest in darn near anything.


9. Decoupling in Reverse

I do not think any countries decouple in 2011, including China. However, on a relative basis, the US could. Europe is a basket case, China is overheating, Australia is headed for recession, the UK is going nowhere, and 2.0-2.5% growth in the US just might look damn good compared to anything else.

Bear in mind far more than 2.0-2.5% US growth is priced in, but on a relative basis that is likely to smash the performance of the Eurozone, Australia, and Canada. China may grow 5.0-6.0% but with 10% priced in, overweight China, the emerging markets and the commodity producing countries is a serious mistake.

Actually, equities are a mistake in general and so are commodities. Finally, falling commodity prices would be US dollar supportive and supportive of a decreasing US trade deficit as well, especially if grain prices stay high while oil sinks. Should grains stay firm while other commodities sink, it would help boost US GDP.


10. US Dollar to Strengthen


Look for the US dollar to strengthen because of the net effect of all the above issues.

On a relative but not absolute basis I like the US. On a currency adjusted basis I especially like Japan. Here is a hypothetical example: Should foreign equities drop 20% and the US dollar strengthen 10% the loss to US investors would be 30%.

Should Foreign investors buy US equities and face a loss of 20% and a 10% rise in the dollar, they would see a 10% loss. US investors of course would see the full 20% loss. Japan looks attractive in nominal terms but strengthening of the dollar compared to the Yen could negate some if not all of that. Equities in general, with the possible exception of Japan do not look attractive.


Miscellaneous Issues

The order in which the above themes play out could be important. If a muni crisis hits the US before a sovereign crisis in the Eurozone and a slowdown in China, the dollar may not initially perform as expected.

Similarly, if the US strengthens more than expected in the first quarter while Europe and China stagnate, another leg down in treasuries may be in store with the US dollar quickly blasting higher.

I have no firm conviction for gold, silver, or US treasuries other than gold is likely to hold its own and then some should the ECB decide to print its way out of this mess.

US treasuries are now in no-man’s-land dependent on the order of things and the reactions of foreign central banks as the crisis plays out. Seasonally, treasuries are generally weak until June (think tax purposes). However, there are so many factors now, including Fed purchases, it is hard to estimate.

2010 was a lull in the global economic crisis. Don’t expect 2011 to be the same. Something, indeed many things, are likely to matter in 2011.

http://www.dailymarkets.com/stock/2010/ ... -for-2011/
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Re: 2011 - Predictions ( Financial )

Postby winston » Mon Dec 27, 2010 7:44 am

U.S. Stock Market: Why The Bear Will Return In 2011 By Toby Connor

It’s almost impossible to find anyone who is long term bearish on the stock market or economy at this time. In the recent Barron’s poll every single analyst expected a rise in stock prices next year and continued economic expansion.

I think they are all going to be wrong, horribly wrong. I believe next year the stock market will begin the third leg down in the secular bear market. And the global economy will tip over into the next recession that will be much worse than the last one.

I’ve gone over the 3 year cycle in the dollar index many times. The dip down into the next 3 year cycle low this spring should drive the final leg up in gold’s massive C-wave. What I haven’t talked much about is what happens after the dollar bottoms.

I actually expect this three year cycle in the dollar to play out almost exactly like it did during the last three year cycle. When the dollar collapses this spring it will not only drive the price of gold to a final C-wave top, it will drive virtually all commodity prices through the roof, the most important being energy and to some extent food.

It was the sudden massive spike in energy that drove the global economy over the edge into recession in late `07 and early `08. The implosion of the credit markets just exacerbated the problem. You can see on the following chart just as soon as Bernanke drove the dollar below long term historical support (80) oil took off on its parabolic move to $147.

What followed was a collapse in economic activity and the beginning of the second leg down in the long term secular bear market for stocks.

This was mirrored by the dollar rallying out of the 3 year cycle low. That rally was driven by the severe, but brief, deflationary pressures released as the global economy and then credit markets collapsed.

We will see the same thing happen again. In his attempt to print prosperity and reflate asset prices Ben is going to spike inflation horribly as the dollar collapses down into the three year cycle low next spring. Just like in `08 that will tip the global economy back into recession and another deflationary period as the dollar rallies out of the three year cycle low.

The stock market will begin the trip down into the next leg of the secular bear market that it’s been in since 2000. The global economy will roll over into the next recession which I expect to be much worse than the one we just suffered through, mainly because it will begin with unemployment already at very high levels.

Contrary to what economists and analyst are telling you, at the dollars three year cycle low next year it will be time to put our bear hats back on, prepare for hard times, and the next leg down in the stock market bear.

http://www.dailymarkets.com/stock/2010/ ... n-in-2011/
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Re: 2011 - Predictions ( Financial )

Postby financecaptain » Mon Dec 27, 2010 1:35 pm

My 2-cent worth for 2011 :-

(1) Hyper inflation in Singapore and whole of Asia. Inflation of at least 5% will be the norm at least next 2-3 years.

(2) Singapore property or asset prices continue to go up despite government cooling measures (half-f measures anyway). Decision makers have big conflicts of interest.

(3) Interest rates of course will rise. Long-term bonds are lousy investments. But beneficial to companies issuing them. That is why you are seeing so many corporates issuing them now.

(4) Given hyper inflation, should contiune to be long in assets and stocks. Staff cost will lag corporate increases in prices. Should see stocks performing well into 2011.

(5) More US products being sold worldwide due to the continuing weak US$. Likely to see more US cars on Asian road. US may be on road to recovery.

(6) Japan's economy to contract further. Their exports (the only bright spot in their economies) will suffer greatly. Singapore's manufacturing sector may start (only starting) to see contraction due to the strong S$ (I will not invest in industrial REIT right now).

(7) Europe may see more shit. EU will continue to be in disarray.

(8) 2011 may still not be so bad for Singapore and Asia after all. Bubble is still brewing and we may all have jobs and resonably good bonus. Property and stock brokers will still be cheering. Shit may hit the fence for Asia in late 2012 or 2013. The large asset bubble will likely burst in our face.

(9) By that time, the US will have the last laugh. Thanks to the sub-prime, QE1, QE2 and now maybe QE3.
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Re: 2011 - Predictions ( Financial )

Postby helios » Mon Dec 27, 2010 2:17 pm

Welcome back FinanceCap! :!:

Thanks for the summary.
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Re: 2011 - Predictions ( Financial )

Postby winston » Tue Dec 28, 2010 8:33 am

S&P 500 To Hit 1,500 By June, Eliades Says By Prieur du Plessis

Peter Eliades, editor of Stock Market Cycles, explains why he sees the potential for a 25% gain on the S&P 500 during the first half of 2011.


http://www.dailymarkets.com/stock/2010/ ... ades-says/
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Re: 2011 - Predictions ( Financial )

Postby winston » Thu Dec 30, 2010 7:14 am

Kass: What Could Go Wrong In 2011? By Prieur du Plessis

A look at why the recovery might not be a recovery but just recession fatigue, with Doug Kass of Seabreeze Partners.

Moving to a net short position on stocks, he said: “We should be fearful that the recovery in the economy as well as the rally in the market will be short lived.”

http://www.dailymarkets.com/stock/2010/ ... g-in-2011/
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Re: 2011 - Predictions ( Financial )

Postby financecaptain » Fri Dec 31, 2010 8:56 am

2011 Ten Black Swans.

Taken from "Energy and Capital".

Do not agree with (1). More likely in late 2012 or 2013. Asia will have growing asset bubbles in next 2-3 years.


1. China real estate bubble pops

Hedge Fund Manager Jim Chanos said the following about China on CNBC:

Construction is 60-plus percent of GDP, compared to exports of 5 percent... The problem is that consumption as a percentage of Chinese economy has declined in the last 10 years, from 40 to 35 percent. It’s all real estate...When construction is 60 percent of your economy, and you are building lots of things that people don’t need, the state may let this get out of control... It’s hard to manage this type of bubble.

China Business Insider estimates there are 64 million vacant homes in China. If the Chinese real estate bubble pops, commodities such as copper, iron, and moly will crater.


2. Spain defaults

High national debt, high inflation, high unemployment, plummeting housing prices, and a second round of bank failures coupled with political mismanagement sends Portugal into insolvency, followed quickly by Spain.
This overwhelms the EU's 440 Euro bail-out fund and sends U.S. Treasury yields into the negative as investors flee to safety.


3. Decade of natural gas

The U.S. Department of Energy (DOE) more than doubled its estimate of unproved, technically recoverable shale gas reserves from 347 trillion cubic feet to 827 trillion cubic feet for its 2011 Annual Energy Outlook. This means lower natural gas prices — and twice the production for shale gas.

Furthermore, you should expect an additional twenty percent increase in U.S. natural gas production through 2035 than was predicted last year.

The national leadership won't take advantage of the opportunity to end our dependency on imported oil due to the combined lobbies of big petroleum and green energy.

In any event, natural gas storage facilities and pipelines will continue to grow until there is a global network of ports and facilities to transport natural gas in much the same way we transport oil. Right now, natural gas is around $4 in Texas but $12 in Japan. Obviously, there are opportunities here.
If you took my advice last year and bought CBI (a company that makes natural gas infrastructure) you'd have doubled your money:


4. Uranium companies surge

Last year, I predicted uranium would surge to $90 a pound.
That didn't happen. Instead, it went from $40 to $65. I predict uranium in the $90s again based on the continued building of nuclear plants around the world.

If you'd listened to my prediction last year and bought uranium miners, you'd have doubled your money:


5. China clings to dollar, riots ensue

China links its currency to the dollar. The dollar is in a state of decline as a policy move to inflate away U.S. debt.

This means that everything in China is going up in price. The official rate in China is 5.1% for November — but food inflation is running at 11.7%. The last time food prices jumped in 2007, there were riots at supermarkets.


6. Farm lard jumps in price

According to a survey by the Chicago Federal Reserve Bank: “Farmland in Iowa increased in value by 13 percent between the fall of 2009 and fall 2010. Our survey for Indiana shows that farmland values since 1985 have gone up about 270 percent, or 5.5% per year."

Farmland prices are increasing at more than twice the historical average. This will continue, despite the fact that all other real estate prices are falling, and create a bubble. Farmers will overextend themselves, crop prices will fall, and we'll have a raft of farm foreclosures.

Willie Nelson and John Cougar will go on tour for Farm Aid VII. The national leadership will continue to squeeze food prices through subsidies for ethanol... After all, you can't be president without a strong showing in the Iowa caucus.


7. Dow has four 10% correction in 2011 — ends the year up 9.7%

Volatility is down to pre-crisis levels. Bernanke has set a paperweight on his laptop number pad. It is adding zeros to the national debt as fast as his Lenovo will allow.

Last year I wrote: “No one is talking about an extended bull market... The money that is currently being produced by the Treasury and hoarded by the banks could flow to equities and launch another bubble."

I predicted Dow 20,000. This didn't happen — but the DJIA did climb 18% on pure liquidity from the Fed.
Judging by how few bargains there are out there, I'd say that the market has gotten ahead of itself. The Bernank will continue with its flood of cash, but expect a lot of mixed signals and volatility... The last time we emerged from a recession based on liquidity was in 2004.


8. The Year of the Electric Car

Look for EVs to sell out this year. The Nissan LEAF, the Chevy Volt, and the Fisker Karma will hit the ground rolling, giving early adopters all sorts of smug happiness.

Charging stations are springing up in downtowns everywhere. You will be able to buy them at Best Buy. The Geek Squad will hook them up in your garage.


9. Dead tech revival

Old companies like Intel (NASDAQ: INTC) (which had its best year ever), Cisco (NASDAQ: CSCO), IBM (NYSE: IBM) and Corning (NYSE: GLW) will break out of their ten-year sideways range based on the revival of business spending. These companies are all trading at small P/E ratios and sitting on large amounts of cash... Intel has $20 billion; Cisco has $38 billion.


10. Fidel Castro dies

Cuban Dictator Fidel Castro finally kicks the bucket. His brother Raúl makes overtures by allowing free speech and releasing all political prisoners. He seeks to open trade talks with the United States. The State Department continues to spurn all advancements.

Leaders in both parties do nothing because you can't be president without Florida, and you can't win Florida without the Cuban vote.
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