2011 - What's Coming

Bruce Krasting's picture

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Cpl Hicks's picture

Bruce, I think you meant to say Boeing won't deliver a single 787 Dreamliner.

qussl3's picture

SGD strongest currency?

Hee hee.

Growing social tensions will make for interesting elections.

Housing bubble here propped up by 30+ year mortgage tenors, and hot money inflows.

Inflation may force MAS to adjust floating band for appreciation but at cost of competitiveness.

Real GDP growth per capita is negative when adjusted for workforce gorwth (>30% over the last few years) and inflation.

MM getting REALLY old, wife just passed on, hasnt made an appearance in ages.

Everything hinges on chronically apathetic domestic sheep allowing for their quality of living to be further depressed to achieve nominal GDP growth, it will be interesting when they go to the polls soon.

RmcAZ's picture

Apple will not come up with a new product this coming year.

Impossible.

chindit13's picture

Good post, as always, Bruce.

If there is a linchpin for 2011 (or lynchpin for the world), it seems it will be either Germany or Japan.  For the former, it will be as you stated, which is how willing will Germany be to pay more for less.  ECB bonds at a rate favorable to everyone except Germany, and maybe France, all to save those who cannot compete with Germany and who cannot get their own houses in order, will test the EU dream (and charter).  If Germany accepts its role as not-so-accidental donor, the euro can soar, the dollar take the brunt of the world's hate, and the gold bugs will be fully vindicated (if they haven't been already).  Germany can be held hostage to threats of Financial Armageddon the same way the UStaxpayer was by Hank Paulson.

Japan is a linchpin because it will have to make a decision on how to fund its debt.  Domestic sources were finally exhausted in 2010, as a decade of ZIRP has forced an aging population to access the nest egg for living expenses and send the national savings rate to zero.  Do they entice foreigners into JGB's or sell their Treasuries?  What rate would foreigners require to find JGB's attractive, and would that rate absorb all of the government's revenues in interest payments alone, creating a Catch22?

What_Me_Worry's picture

Best list I have read yet.  Very specific and great logic behind each prediction.

I disagree to the no more QE.  The Fed and WS will spend months using their media contacts and the speeches they give to ensure they can change the theme to something new and different(even though, it will still be QE3).  It may be by buying up more mortgages.  Most likely, it will be by supporting the muni market(although, it may be an indirect method).  They may be able to dangle a carrot over the PD's to support this plan and use their Fed reserves as to make it stealthy.  They can use those funds to support the system without even making an announcement.

They cannot sit on their hands while the USG runs another $1T+ deficits(reported, obviously the real number is much higher).  They must continue to support it all until the budget comes closer to flat(I'm thinking under $500B reported or so).

They could also set up some sort of guarantee program, on a federal level, to support the muni market.  That way it doesn't seem like they are paying for it outright, yet they will still shoulder the burden/risk.

Although, there is little doubt you have a greater understanding of these issues than I will probably ever attain.

I spend a lot of time lately trying to figure out how much our main export of the "FRN" is worth on a yearly basis to the US economy.  Surely, its worth something in the neighborhood of $100's of billions a year.

thinx's picture

That's all very well for predictions, but what about Bankster executions?  Any chance of that in 2011?

Mr Lennon Hendrix's picture

-Agree about the volitility.  I think that it should ramp PMs massively, as gold has recently (for the past 6 months) traded higher on a strong dollar.

-I agree with most of this, but I think the Spanish crisis will leave an impact on finance that is not recoverable.  How can we continue to promise the future generations earnings on the back of crumbling empires?

-I think gold trades at a minimum high of $2200 next year, and silver at a minimum high of $44.  Those low targets will be easy to make, and will probably happen Q1.  My targets are $3300 as a high for gold next winter, with silver striking $80 by the finish of '11.  But with all the topics you discussed, the higher prices are likely.  I think the range for precious metals has huge upside.  This should help keep banks barely solvent.  JPM will spin its dervatives to stay solvent, but can they make due without a functioning real estate market?  I think real estate implodes next year, and loses half of its value.  The bottom will not be in though.  The RE bottom is still a decade out.

-I agree that the Yen is overbought, but is there a currencie oversold?  Maybe New Zealand, AUD, Brasil, and Canada are strong, but britain?  The Yen will lose but most currencies will.  I guess the Pound is the ptrettiest pony in the glue factory.  It is a little better than the Euro, and better than the dollar.

-And by the way, Geithner does a horrible job

Shameful's picture

Love you man! People call me crazy when I call for minimum of 2k gold by end of 2012, if I called for 2200 in 2011 they might get me committed :)

Though if we hit the 3300 and 80 respectively at years end 2011 then 2012 will see total dollar death. It's not like the Chinese or our other creditors won't notice what is happening. I'd like to think they have better control of the situation to have it at least slowing spin out of control.

In the dollar death are you calling for lower RE prices in dollars or gold? If we are pricing in gold then I totally agree and think that any RE purchase without max leverage is totally fool hardy, and even then would only look at rural stuff. Pricing in dollars, well anything could happen. If Zimbabwe Ben steps on the gas enough all assets will rise in dollar terms.

Mark Beck's picture

Good overall list except for:

When faced with a possible state default, will DC bailout the states? and if so in what form? bailout across all states ARRA2, FED buying bonds, or direct Treasury loan?

FED purchase of more toxic MBS to save member and TBTF banks from loses?

Will there be another across the board stimulus ARRA2?

Will the FED reduce its balance sheet (tighten) in 2011? and if so in what form?

If the FED is up to about 40% T buyer new and churn, how can the bond market function normally when the FED backs out? Can it back out, and if not, how long before announcing QE3 to again prop it back up?

Will Detroit be the first major city to announce bankruptcy? and if so will they take it private (a robocop reference) :)

Any thoughts about FASB, and will it get any bite back?

Happy new year,

Mark Beck

margaris's picture

I like your prediction of 0.90 for EURCHF.

This is my biggest worry for 2011 since I am living in "CHF" and working in part for "EUR".

I hope that when "ugly pair EURUSD" starts to strengthen maybe even to 1.5 as you predict, that this will have a positive effect on EURCHF as well. EURCHF should really stabilize around 1.3 or more, I find this a fair value.

0.90 on the other hand is like the end of swiss competing ability. How am I going to convince the germans to pay me more for my services now that EURCHF sinks? Impossible, I cannot pass on the currency risk to my customers, I just simply will have to accept that I have to either work longer or get paid lesser or both.

SNB will have to act one way or the other. If they dont intervene simply because they have seen in 2009/2010 that intervention doesnt work, then they are really incapable idiots. Why do they exist?

What_Me_Worry's picture

If they feel things may unravel, though, they are better off remaining strong and becoming the default reserve currency should the FRN cave.  Who cares if you make it harder for Euro-land loans to pay you back if you feel they can't pay you back, regardless.

I still trust gold/silver.  However, gun to the head, and I have to choose one currency to store wealth then I am going with the CHF.

You could still protect your future earnings, from a forex consideration, with insurance.

margaris's picture

I trust gold/silver too.

CHF is just fiat money like everything else.

So in time of excess fiat money CHF should join the club and print, print, print!

Let gold and silver rise! And fiat money fall!

Its no use in having good and bad fiat money.... let the unmasking proceed!

TruthInSunshine's picture

Bruce,

I had not realized you made the calls you did in 2009 re 2010, and I am shocked at how prescient you were a year ago! Outstanding work!

And I have some humble advice if you're willing to listen: Ignore the trolls, because they're not worthy of any response, let alone a thoughtful one.

Best of health and prosperity to you and your family in 2011.

web bot's picture

Great article.

 

I'd like to see your view 5 years out...

sherryw's picture

Been lurking here for 18 months. Rarely comment. Always like your work. Thanks for your courage.

Oh, bye the way, borrowing standards by the banks here (downunder) are being reviewed downwards . To prop up our sagging housing bubble the latest bank proposal is to count a proven record of making rental payments towards eligibility for housing loans in lieu of a sizable deposit. Just what we need!

cosmictrainwreck's picture

Been "lurking" have ya? :) Well, good for you for stepping up. Is good to get news from the front lines in the land of Oz. Don't be a stranger.

bullet357's picture

He didn't mention that if there was a falseflag event (nuke incident) that most of his predicting would be a mute point.  Also he did not predict that scientist would verify in 2011 that a Galactic Super wave would hit the Solar system in 2012. Two words to live by in 2011 Food & Ammo. 

Orly's picture

"-Fannie and Freddie will be merged. Out of the ashes will come a good bank and a bad bank. The bad bank will hold 2.5 trillion of questionable mortgages. The US will end the year exactly where it started on this critical issue. The federal government will be responsible for more than 95% of all new mortgages issued."

That's because that is the only way to maintain the banker-built paradigm.  They should have done that in the first place, as I had expected them to do.  When Paulson went before Congress, the only way I could figure out of this mess was for the government to guarantee these mortgages.  It only made sense.

If the government had just backed up the mortgages, then everything wouldn't have been so blown all out of proportion, with major, major, once-in-a-lifetime dislocations and distortions in markets.  Imagine if we had spent a whopping $645 billion (pulled the number out of the air to make you remember when six hundred, forty five billion dollars was a hella lot of money...) to backstop the mortgages, everything would have remained calm...perhaps a judicial process could then proceed against these con men?

Not now.  Pull one card out and the whole thing goes down in flames.  It may be too late to use this option anyway if only because now things are so distorted.

 

As always, great, thought-provoking stuff, Bruce.  Have a wonderful new year.  :D

the grateful unemployed's picture

as we see from the census numbers there is probably an oversupply in housing. immigration gets tougher, those population numbers are leveling off, and the structural problems in the labor market, it could take years to work off their inventory. no wonder they didn't want to own those mortgages. deflation and crash are sometimes synonomous they are trying to let the air out slowly. of course baby boomers were thinking second homes, pretty soon they'll be thinking rest homes. to make a couple more predictions: the day of the private home may be over. there is no real supply problem though, so that scene from Dr Zhivago should not come to pass, but housing is an expense as well as an investment, and there aren't going to be enough single families who can afford to maintain the sort of housing that was built. Much of it should be converted to multifamily, and the rest bulldozed.

RoRoTrader's picture

Best wishes for 2011 and beyond, Orly.

Orly's picture

The world begins to return to normal next week, so you will have little need of me.

Basically, buy US dollars, sell yen and Australian dollars...talk about stick-a-robot-on-it, set-it-and-forget-it situation.  I wish everyone a great trading year and the best of luck with their family and friends.

Vaya con Dios, amigos.

Olexsandra

Trimmed Hedge's picture

- Towards the end of the year, Bruce Krasting will publish a list of what he sees happening in 2012 -- the overwhelming majority of which will, as in past years, not come true.

Bruce Krasting's picture

Wrong on both counts. This is the second time I have ever done this. There is no "past years" that I was constantly wrong about. I did do this in December 09. This is the link. I got a fair number right, and yes I got some wrong. Where is your 2011 list Trimmed hedge? Where is your 2010 list so we can see how you're doing? We all would love to have a look. We await your response.

BK

http://brucekrasting.blogspot.com/2009/12/whats-in-store-for-2010.html

 

 

Trimmed Hedge's picture

I have my list and I'm a'checkin' it twice, Brucey.

 

HO HO HO, BITCHEZ!!!

AnthonyScungilli's picture

The bonuses are so out of line with us plebs earn because

they are adjusted to the coming hyperinflation. Physical gold is going to a rarity,

tthe criminals have absconded with it.

psyclopz's picture

Bruce,

Thanks for the great work!

May i ask how did you come to conclusion that the strongest currency will be the Singapore dollars?

 

Bruce Krasting's picture

Lack of a viable alternative as a reserve currency.

In any situation there are only three possible outcomes. You can win, you can lose or you can draw. So it is a zero sum game. In the case of the Sing$ I think that there is no risk of depreciation. Therefore it is not a zero sum outcome. You can either breakeven or you can win.

Capital will always move to a situation like this, It is safe, but has an upside. What could be better?

monopoly's picture

Nice post Bruce and enjoy your work. But I do not even know what the market will do by 4PM tomorrow. When jerks like kass and cramer make forcasts it is all just spin for snake oil.

Noone knows what is going to be. No one. But you had some fun.

ebworthen's picture

Bruce,

Good list, I agree with most of it, well done.

Nice picture too, from the days when cars and televisions in America were actually built in America.

"Admiral Televisions" - wow, I remember those, but I remember rabbit ears and getting television for free - you just had to sit through the $*@!*! commercials (but at least it wasn't tampons, condoms, and ED ads!).

Happy New Year!

halvord's picture

North Korea is a refugee bomb of 80 million people. South Korea AND China really really want it to stay unexploded. NK acquires its only international clout by waving the fuse around. China does not secretly cheer for Korean peninsula chaos.

In the WikiCables there are bits from China diplomats who are annoyed that they have little influence in NK even though they support NK.

 

au_bayitch's picture

Exactly, +1. No gov't wants chaos in a poor neighboring country.

pholosophy1's picture

Thanks for starting the discussion BK. I think at some point in 2010, perhaps by Spring, there will come the realization that the Fed's actions are showing no results with respect to US inflation (actual consumer prices), employment (official numbers stay above 9%), or interest rates (Seem to move contrary to Fed's intention). One thing that will become clear is the Fed's actions only exaggerate the movement of cash into non-productive asset speculation. As a result, the nations that are facing "true inflation" will start hurting and complaining and their economies (and people) could become destabilized. Meanwhile, the US consumer, while being squeezed on a few product categories, will continue to see price deflation as a larger problem as producers will have no power to raise prices outside of food / energy. The Fed, while continuing QE3 will see hot assets, markets and interest rates continue to rise into spring before interest rates reach the point where the “plug is pulled” on commodities and markets in favor of debt. There are no "real underlying" inflation fundamentals. This will become clear. We are 3 years away from rising house prices, 3-5 years away from a turn around in official employment numbers and just about 3 years away from meaningful financial reform. The stock market is not the place to be unless you continually take profits on narrow margins and protect your downside vigorously. Look for a wave of stories about the growth of the US “grey” market and “black” markets that our increasingly frustrated unemployed will enter at an expanding clip to the point where we will start to question the accuracy of unemployment / growth numbers entirely. Also look for the growing discontent of our youth towards “institutions” accelerate as their future looks increasingly bleak (esp. from those who are dropping out of education as their first abandoned institution). They will also turn away from the oligopolistic nature of our economy, commodity industrial food production, mass-retail environment and eschew all consumption patterns we have come to accept as “normal” while developing an entirely different consumption ethos that will further exasperate the ability of “institutions” to affect influence on the economy in the US. I’ll leave it to you to figure out how.

greenewave's picture

We are NOW in a Houseless, Jobless RECOVERY according to the CROOKS on WALL STREET!! It’s such a FRIGGIN TERRIFIC RECOVERY watch the YouTube video “Jobless..Houseless..Recovery. Let’s Celebrate!” at (http://www.youtube.com/watch?v=aNY96ovxy2o).

Anonymous-

This guy? is kinda! like a love child from Peter Schiff & Max Keiser!

thechainrule's picture

My guess is that the market will experience swings similar to those we saw this year but I expect 2011 to look a lot like 2005. 

 

Someone will call Ron Paul out.

 

NotAlwaysSo's picture

More completely random crap from Bruce. Seriously, do you throw darts at a fucking dictionary and write the words in the order they come up? It's junk like this that make ZH seem more like speculative amateurism than informed analysis.

Bruce Krasting's picture

Yeah well this amateur got a number of thing right last year. Sure I got some wrong. But I was either close or going in the right direction. You could have made some money with these ideas. I did. How did you do last year? Where is your record so we could pick it apart? I put mine up in print. You?

Some thoughts from a year ago. Tell you what. Meet me here in twelve months. We shall see how well I do.

 

From last year:

-The Mid term elections will go to the Republicans. A surprising number of independents will be elected. The Democrats will still have a narrow majority. The end result will be legislative deadlock.

-Gold prices will trade as low as $900 and as high as $1,400. $1,400 will come first.

-Boeing will finish a few Dreamliners but they will face many delays and problems.

-Apple will trade at $300 (tablet) and Google at $750. Amazon’s stock will be lower over the full year.

-The Sovereign Risk Story will continue to be a major theme. Italy and the UK will be lumped into the status of Greece, Spain and Portugal.

-There will be no breakup of the Euro. Greece will not pull out. The strong members will provide some relief for the weak. But the problems will not go away and the possibility of some form of two-tiered Euro will be a matter of open discussion.

-China will surprise us all and revalue the Yuan by 10%. The currency will still be undervalued. China’s GDP will grow at 10% for the year. But the prospect for 2011 will be in doubt.

-Mexico will devalue the Peso by 15% and Brazil will revalue the Real by the same amount. The Canadian Dollar will exceed 1 to 1 versus the US dollar.

-In 2010 over 90% of all new mortgages will come from or be supported by the government.

-There will be several occasions when it will appear that we are about to fall off a cliff (or soar to the moon). Beware of these conditions. It is more than likely that the markets will be oversold and over-worried (or too enthusiastic).

-Japan will not get out of recession.

-We will pay significantly more for virtually everything that we consume. The CPI and COLA numbers will be modest. We will be poorer as a result. -American’s distrust of their financial institutions and our financial leadership will deepen. The whole notion of “I Promise to Pay” will come into question. As a result, the availability of consumer credit will continue to dry up. -There will be no curbs placed on Dark Pools or flash trading. The short sale rule will not be re-introduced. There will be no regulated futures market for CDS. The Securitized Market will not recover.

 

Vendetta's picture

So, what you are suggesting is that Jesus is NOT returning in 2011?

cosmictrainwreck's picture

nope.....won't be near bad enough yet

knukles's picture

Thought He was gonna run with Palin in 2012.

strannick's picture

'Gold will be higher a year from now but off its peak. At some time in the fall, gold will be near 1,800 and the New York Times will do a front-page story that gold is on its way to 2,000. That will be the high point of the year'

Thank you Grand Poobah. What a bunch of pedestrian crap

downrodeo's picture

"Have a great year!!"

er...ah...  thanks, i guess...

gwar5's picture

My prediction for Spain 2011 differs slightly from Krastings.

Spain gets bailed out with $500B from the EU by end of 1st Qtr sure enough, but the EU will still have plenty of money because The Bernank will buy stealth Euro bonds and take the toxic Spainish debt as collateral. 

My prediction for 2013 is that Bernanke finally admits (2 yrs later and a Bloomberg lawsuit) what he did in 2011.

 

 

DR's picture

Bruce,

I see you aren't making any GDP calls but I gather that you are anticipating a slow down  for the middle of next year..

Bruce Krasting's picture

As always, I am below concensus. Full year GDP=2%

Q1=2.5

Q2=2.0

Q3=1.5

Q4=1.5

 

Boring... I see no growth. I do not see a double dip.

lewy14's picture

I think things will be better than that: we'll see around 3% growth. Unemploment will end the year sub 9%.

It's not optimism; I just believe events will take the most confounding path possible.

And this kind of growth and employment will be the most confounding for everyone - crappy, but no mandate for strong action or panic.

CustomersMan's picture

For those who were/are brushing off the disaster that is the Gulf of Mexico, here is an excerpt from a new report. Read it and weep or not. No matter,...... it will be of increasing importance as it changes the flows of water, sealife, the economy of the U.S. and OTHER COUNTRIES, and the weather here aand abroad. This is my prediction for 2011. It will have a far larger and more diverse impact than anyone can imagine, on the markets,economy and otherwise.

 

***************************************************************

 

December 28, 2010 by Alex  
Filed under Featured, Gulf Oil Disaster, Intel Hub Featured Articles

Leave a Comment

Global Research
By Dr. Tom Termotto

It is with deep regret that we publish this report.  We do not take this responsibility lightly, as the consequences of the following observations are of such great import and have such far-reaching ramifications for the entire planet.  Truly, the fate of the oceans of the world hangs in the balance, as does the future of humankind.

The Gulf of Mexico (GOM) does not exist in isolation and is, in fact, connected to the Seven Seas.  Hence, we publish these findings in order that the world community will come together to further contemplate this dire and demanding predicament.  We also do so with the hope that an appropriate global response will be formulated, and acted upon, for the sake of future generations.  It is the most basic responsibility for every civilization to leave their world in a better condition than that which they inherited from their forbears.

After conducting the Gulf Oil Spill Remediation Conference for over seven months, we can now disseminate the following information with the authority and confidence of those who have thoroughly investigated a crime scene.  There are many research articles, investigative reports and penetrating exposes archived at the following website.  Particularly those posted from August through November provide a unique body of evidence, many with compelling photo-documentaries, which portray the true state of affairs at the Macondo Prospect in the GOM.

http://phoenixrisingfromthegulf.wordpress.com/

The pictorial evidence tells the whole story.

Especially that the BP narrative is nothing but a corporate-created illusion – a web of fabrication spun in collaboration with the US Federal Government and Mainstream Media.  Big Oil, as well as the Military-Industrial Complex, have aided and abetted this whole scheme and info blackout because the very future of the Oil & Gas Industry is at stake, as is the future of the US Empire which sprawls around the world and requires vast amounts of hydrocarbon fuel.

Should the truth seep out and into the mass consciousness – that the GOM is slowly but surely filling up with oil and gas – certainly many would rightly question the integrity, and sanity, of the whole venture, as well as the entire industry itself.  And then perhaps the process would begin of transitioning the planet away from the hydrocarbon fuel paradigm altogether.

hardcleareye's picture

Went through and read the article several times, interesting read but short on collaborating data. 

In the beginning of the disaster, John Amos at "SkyTruth" (a interesting site) made the satellite images available on line, (NASA would not give him the imagery got it from the folks across the pond)

http://blog.skytruth.org/search?updated-max=2010-04-26T12%3A11%3A00-04%3A00&max-results=7 

clearly showing the size of the leak was substantially greater than what was being claimed in the media, Amos's estimates proved to be correct.  Best information says (are the images supplied to Amos's being "filtered"??? oh boy I need to get my tinfoil hat out for this one), currently one Leaking Well at Platform 23051. 

Could not find a resume, etc on Dr Termotto.   

The Nov 8, 2010  Sand Sample Analysis at Siesta Key, FL (near Sarasota) with 173ppm of corexit/crude "caught my eye".  Just to give you a feel you cannot discharge more than 15 ppm of oil from your boat bilge, makes pretty rainbow rings if you do......  173ppm hummmmm...

Common_Cents22's picture

I was just at ft myers beach and it looked fine.  

Are they saying the oil is still gushing in the GOM?  Is this perhaps a reason the admin is banning oil drilling in the gulf?

Cheesy Bastard's picture

Thanks Bruce!  Excellent post.  Looks like I'll have to follow Ol Remus' advice:  Be attentive, prepare, and stay away from crowds.