2011 - What's Coming

Oh boy is 2011 going to be an exciting year! Some things that I think might happen:

-Volatility is going up across the board. If you have the stomach for
the swings that are coming across all markets there is a ton of money to
be made; balls and timing are all that are necessary. The markets will
create dozens of opportunities to make and lose.

-There will be 50 days with a swing in the S&P greater than 1%.
There will be 10 days where gold swings $50. There will be two days with
a drop greater than 100 bucks. Most of the big moves will be down
moves. Bonds will not be spared the volatility.

-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.

-Copper will continue to rise. This metal will benefit as the poor man’s
gold. Why buy an ounce of something for $1,600 when you can have a
whole pound of something else for only $5? The logic is compelling only
because there is no logic. Increasingly, it will become understood that
money does not hold value. Copper will do a better job of storing value
then a Treasury Bond.

-The US bond market is in for a heck of a year. The 30-year will trade
at BOTH 3% and 5%. Higher rates will come early in the year, then the
deflation trade will come back into vogue.

-Spain will be the next sovereign debtor that falls prey to the market.
This will happen before the end of the 1st Q. The package to bail them
out will exceed $500b. This will exhaust the EU resources. There will be
very high expectations that contagion will then move to Italy. That
will not happen in 2011 (2012?) The European Central Bank will step up
to the table (finally) and support the market for Italy. Sometime
between March and June Italian bonds will be a great buy.

-The IMF will contribute $125b to the Spanish bailout. The US portion of
this will be $25b. Republican Senators and Congressman go nuts. The
American people will side with them. The argument, "How can we help Spain but not California?" will
be the mantra. In the end the IMF commitment will stand. But that will
be the last time the US contributes to a sovereign bailout. This will
prove to be very destabilizing at some point after 2011.

-The ECB will be forced to issue bonds that are joint and several debt
of the EU members. This development will stabilize the EU temporarily,
but it will be hated in Germany. The amount of the new issuance of these
bonds will be small. The program will be terminated in 2012.

-The dollar versus the Euro will be all over the lot. The low for EURUSD
will be ~1.17. The really big surprise is that toward the end of the
year the Euro will be pushing 1.50.

-The CHF will be like copper. It will attract investors as there is no
good alternative. Before June EURCHF will trade below 90.

-The market will finally wake up to the fact that the YEN is not a good store of wealth. The continuing argument will be, “Yeah the Yen stinks, but everything is worse so it should be okay”.
Wrong. The Yen is a short. The best currency trade of the year will be
long Sterling short Yen. There will be better levels to put this trade
on then exist today; be patient.

-The US will have a full year deficit of 1.4 trillion dollars. This
depressing reality will hang on the US economy/markets. Congress will
talk about the problem endlessly, but little will be accomplished. By
the end of the year the problem will be so acute that belt tightening is
put in place for 2013-15. But it will be too late by then.

-QE2 will be the last QE we see. The program will end (on schedule) on
6/30. Perversely, long-term interest rates will rise as long as QE
continues. When the program is finished rates will begin a rapid
decline. This will not go unnoticed by academia. The result will be that
QE will be a disgraced policy that will not be used again for at least
five years.

-The high for the S&P will occur before June. The S&P will fall short of 1,500. The low will be 1,100.

-Oil will rise to $130 in the next six months. It will be above $100 at the end of the year.

-China’s inflation rate will continue to rise. Food will be the primary
driver. The central government will respond with monetary tightening and
an acceleration of the Yuan appreciation. It will not work. Inflation
will push 7%. The domestic economy will continue to grow but at a much
smaller pace. 5% GPD will be all that China sees for the year. The trade
surplus will fall by a third.

-Brazil will continue to shine as a resource rich country that runs a
trade surplus and has low budget deficits. The surprise of the year will
be Argentina. Food will be the reason. Argentina’s fortunes will
improve with rising wheat and soy prices.

-The US will wind down its presence in Iraq. With every step we take out
the door domestic violence will rise. Iran will assume a larger roll in
the south (Basra). This will not go over well with the US. Much of the
year will be spent debating what should be done. US warships will be off
the Iranian coast waiting for a phone call, but no shots will be fired.
Russia and Germany will not go along with strong sanctions against
Iran. The problem will fester toward a resolution in 2012.

-Kim Jong-Il will die. His son will take over. The heir is a
nut, there will be more military exercises that results in shells
landing on S. Korea soil. China will make public statements that it is
trying to bring order; behind the scenes they will be applauding the
chaos.

-Obama’s popularity will continue to fall. The legislative “successes”
at the end of 2010 will convert to a series of failures. There will be
no new stimulus. Portions of the health care legislation will be dialed
back. The mandatory participation feature will be found
unconstitutional. Without this feature the legislation makes no economic
sense and a great debate will be initiated as to what to do about it.
Nothing will be accomplished. Reason? There are no “answers” to this
problem.

-Obama will propose a means test for Social Security in his State of the
Union Address. Retirees who are living the high-life (Warren Buffet
types) are going to have their SS checks cut to the bone. Any senior
with income of $200k will be impacted. The great socialization of Social
Security will have begun. The popularity of this program will fall of a
cliff.

-The 2% reduction on worker contributions to Social Security will be
extended and expanded to 3% for 2012. Rates will not go up in future
years. Social Security will have to be gutted as a result. This will not
happen in 2011. But the seeds will be sown for this to occur in 2014.

-2011 will be a stock pickers market. Index investing will see a bad
year. Some of the darlings of 2011 like AAPL and NFLX will not fare so
well. While I don’t see big declines in these stocks there are much
better places to put money to work. M&A will be a dominant theme.
That is where the action will be.

-There will be at least three more 'Flash Crashes'. The SEC will launch
another investigation into how this could happen. The conclusion will be
that ETF's and how dealers manage them are responsible for the
liquidity problems in individual stock names.  There is no solution to
this problem. The market will be on edge looking for the next mini
crash. A stock will fall prey to this and drop 20% in seconds. Unlike
prior examples there will be no recovery in the stock. Holders will
protest the losses. There will no restitution. Market confidence will
fall as a result.

-Meredith Whitney will be proven wrong in her forecast that 50-100 munis
go chapter 9 this year. The process to insolvency takes much longer
than she has anticipated. Only 11 munis will make a chapter filing. The
rest will be pushed to the brink in 2012.

-The center of attention will move away from California as the most
bankrupt state. In his State of the State address in January, New York’s
new Governor Andrew Cuomo will fess up to the fact that for the past
year of so NY has been burying its problems. Substantial cutbacks in
spending will be the result. NY State long -term GOs will trade at 6% at
some point in the year.

-Unemployment will not go down. The average for the year will be above
10%. The number of workers who leave the system will rise to 20mm. These
workers will find part-time jobs that pay cash. The new day-workers
will compete will illegals for employment. Social tensions will be the
result.

-The Chevy volt will not sell well. Boeing will be unable to complete a
single Dreamliner. GM will trade below $30, Boeing will hit the low
$50’s.

-The Singapore dollar will be the strongest currency on the globe in 2011.

-Apple will not come up with a new product this coming year. The rest of
the consumer tech manufacturers will gain some market share. The
problems with dropped calls with the iphone will be an issue. Apple will
respond with alliances with a number of other providers. ATT's stock
will suffer as a result.

-Headline inflation will rise a bit. It will push through 2%. Those
numbers are meaningless. The price of a pair of jeans will be 50%
higher. Food will cost us 15% more. Gas will be at $4. Bernanke’s QE
will be blamed for the inflation.

-Much to my chagrin and surprise Tim Geithner will not be replaced as
Treasury Secretary. He will continue to do a very mediocre job for us.
He will be replaced in January of 2012.

-Comcast will complete the acquisition of NBC/CNBC. One of the first
acts will be to fire Mark Haines. Nothing will help. The ratings will
continue to fall. Becky Quick will move to FOX Business. Diana Olick
will get her own show. She is being groomed to be the next Suzie Orman.
Simon Hobbs will return to London.

-There will be violent weather episodes all over the globe. The La Nina
condition that is now dominating global weather is the strongest in 50
years. This will make a dramatic shift to El Nino conditions this
summer. This will set the stage for a very big Atlantic hurricane year.
There will 12 named storms. Two cat. 4 storms will hit the mainland.

-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.

-Washington's other mortgage lender FHA will run into troubles. Their
minimum reserve level set by congress will be breached. A bailout will
be required.  The true cost is buried. The bailout will be less than
$20b. As this is a problem for the Senate, the legislation will passed
quickly.

-There will not be a failure of a government bond auction. But the
coverage for each issuance will grow smaller. China, Russia and Brazil
will reduce their holdings of US reserves. The mysterious "household"
sector will show a huge increase in Treasury holdings. This will be
confusing as it will not match up with other data. UK reserve holdings
will show a decline. These are actually holdings of China that were not
included in official reserves. This will bring uncertainty.

-Mortgage Gate will die as a headline story. In fact it will go the
other way during the year. Increasingly, the problems in real estate
will be focused on the fact that there has been too few foreclosures.
That too many people had been living in a home without paying a dime
becomes a cost that all have to bear. As a result there will be a much
higher level of foreclosures throughout the year. Contrary to
expectation, residential real estate for average priced homes will not
decline much further. However, prices for high-end homes will continue
to fall. Anything with a price tag of greater than $1mm will be worth
20% less by the end of the year.

-The narco violence in Mexico will expand to many more cities. Tourism
will be hurt as a result. Some of the violence will pass over our
border. Anti immigration attitudes will expand. Because the low-end
economy will remain in the dumpster the actual number of illegal aliens
will decline by more than 1mm. This will add to the RE woes in some US
areas. It will stress the countries that they originated from as $
remittances decline.

-Interest rates will be higher throughout the year for corporate bonds
and Munis. This will bring a reversal of the mania to buy dividend
stocks. Those who thought that this investment strategy would work for
them will be disappointed. The number of hucksters pushing the dividend
story will grow in number while the popularity of the strategy declines.

-Jon Hilsenrath will write an article for the Wall Street Journal that
is actually critical of the Fed. The unpopularity of the Fed will rise
to such a level that Jon will have no choice but to follow suit.

-The Fed will come under attack from all sides. They are truly in a
no-win situation. Unemployment will continue to rise while inflation
rises and the dollar declines. One side will shout that the Fed did too
little (Krugman), others they did too much (the rest of the world).
Everyone will hate the Fed as a result. Bernanke will not lose his job,
but his term as the boss at the Fed will be forever tainted.

-ZIRP will be with us for yet another year. Bernanke will not let go of
this loser policy. Inflationary expectations will respond at some point.
By the end of the year a Fed Funds rate increase will be seen as
imminent even though the economy will be soft.

-Social unrest will become visible in America in 2011. There will be
demonstrations in many major cities. Some will turn violent. Economics
will be at the heart of the anger. The frustration that was evident in
France in recent years will come to the US.

Have a great year!!

Comments

[Fat Ass]

Wow anyone this good at predicting things must be rich.

[BeeTee]

+100

Thanks Bruce.

I agree that Sterling will lift off once it becomes decoupled from EUR.  It is a strong currency (relatively speaking), maligned and oversold.

I like your comments on tny and tnx.  V. interesting.

Thanks again

[Panafrican Funk...]

Like the post Bruce, obviously nobody can predict the future (unless you more or less run the present) but it's fun to try.  My thoughts:

QE will continue indefinately.  Both the Eurozone and US States will be bailed out.  The Eurozone financing mechanism will primarily be the IMF, and the ECB will continue to decline in relevance due to it's relative impotence.  I do think this is headed towards the "bancor" idea but I don't see it being implemented before 2013. 

The Fed will continue to be the primary buyer of treasuries to the chagrin of far too few people to make any difference.  The Fed will also be the buyer of state/muni debt, again to the chagrin of far too few people to make any difference. 

The dollar will probably stay in the 78-82 trade weighted range and I think the euro stays in the 1.28 - 1.34 range vs. the dollar.  I think the CHF, CAD, and AUD all move up another 12-15% against both the dollar and euro.  I stopped pretending to know wtf is going on with the yen a long time ago, so I'm going to wuss out and give no predictions on it, period.

I think whatever happens with F/F, they're going to continue to be the govt. guaranteed backstop to a housing market collapse, and as such, will continue to be responsible for 95%+ of said debt.

Regarding treasuries, I expect both the 30 and 10 to continue to move more or less in tandem and settle around 125 (talking futures). 

In equities, I expect the SPX to range somewhere in the 1300 - 1400 range on a pretty consistent basis with shitty volume and volatility.  I think high div plays in REITs, telecoms, and financials are probably your best bet at capturing anything yieldwise (if you insist on a SHTF scenario, water and electric utilities aren't a terrible idea).  I'd probably stay the hell away from longs in commodities or companies that produce said commodities (particularly miners and oil/natty gas), they're due for a major correction.  Gold is due to take a dump down to the 850-900 range, silver I'm anticipating will drop down into the 12-14 range.  Copper will settle around 3.10 - 3.25.  Grains and softs are going to get slaughtered, a drop of 60-70% would not surprise me in the least.

Overall point:  I thoroughly dislike virtually everything about the predictions I just posted, but that doesn't mean they're not going to happen.

[pholosophy1]

Thanks for your follow up predictions, but one inconsistency I note with your words: how do you see a collapse of commodities and a stable S&P.  Not likely scenario.

[kaiserhoff]

I'm very much afraid you are right, Bruce.  Not much change, just a slow bleed out of all things decent and productive.

You know who the critters are at CNBSnooze, and you care?   ;)

[topcallingtroll]

I am calling a top here guys.

[Escapeclaws]

Couldn't help noticing that nobody is predicting any prosecutions of the criminals who got us into this mess.  Guess it's a given that they get off scot-free. Same with ratings agencies.

The people are begging and crying for austerity. Will they be happy when they get it?

[ColonelCooper]

Excellent, fun post Bruce.  Please keep it up.  Even when I disagree with something you write, you make your case in such a way that I find myself making a concerted effort to understand your point.  Your posts are a huge asset to ZH.  Thank you for your efforts and have a good 2011.

[MGA_1]

Can't disagree with too much here except:

* I think QE will simply continue, but may not be talked about

* The market will crawl up to 12.5k

* People begin to wonder about inflation

I give an outside chance of:

* A Euro country leaving the monetary union

* Currency crisis which will change all predictions above.  If not 2011, then strong chance for 2012.  China is enduring quite a bit of inflation.

[knukles]

"People begin to wonder about inflation"
Jeeez.  I'd been wondering about that.

[Uncle Remus]

Thanks Bruce. Always look forward to your posts. One thing I think just about all can agree on, we're going to need seat belts.

Yeeeeeeeeeeeeee haaaaaaaaaaaaaaaaaaaaaaaa

http://www.youtube.com/watch?v=wcW_Ygs6hm0

[thegr8whorebabylon]

Bruce, would you say gold will rise predominantly on dollar weakness, or buying?  Any further thoughts on this would be appreciated by those of us in other currencies.  Happy New Year.

http://www.youtube.com/watch?v=421pZgg-vlY

[RunningMan]

Bruce - thanks for putting your neck out there continually with good writing and reporting. I like many others always click on your articles and will continue to do so in the new year.

As for the predictions, they appear grounded and within the realm of reasonableness on all fronts. I think the collective sense of outrage will grow, both in terms of people angry at government AND angry at those abusing the system because it can be abused - specifically those that don't pay their mortgage. Let's not forget, in America, it is 'we the people', and the banks, the Fed, the homeowners - one and all are part of this nation. I think the merging of F/F is likely, but I'm not sure the government has the nuts to do what must be done there. Honestly, there shouldn't even be any remnants left of that system. We need to go back to banks holding credit risk, the way it was meant, so that there is collective skin in the game rather than endless capital arbitrage. F/F is a failed experiment, and it became clear when their balance sheets grew over $100BN each year and the guarantee business (for which they were created) became the afterthought. Compounded with CRA requirements (for banks) and LMI targets (for F/F), this compounded the housing bubble. If we solved one thing in 2011, I would hope this is it - I fear it won't be.

[crzyhun]

Good job. We will know in the fullness of time.

One quibble...the first to go will be Ireland, then because of the banks- england, then USTreasury as a backstop. The Euro is untenable, and there is no alt!

This is not happy thought, but if the US$$ cease to be the reserve currency, we are all FUBAR! When? We will see in the fullness of time.

Happy new year community.

[yabyum]

Watch for the weather in the worlds wheat/food belt. Hungry people do crazy stuff.

[Freddie]

"The CHF will be like copper. It will attract investors as there is no good alternative. Before June EURCHF will trade below 90."

 
CHF?  Swiss Franc?

[Bruce Krasting]

Fair question Freddie. CHF= Confederation Helvetia Franc= Swiss Franc

[lewy14]

So I guess when the Swiss had a Civil War, their Confederates won.

[knukles]

My compliments sir; I respectfully defer upon a true and gentlemanly response to the inquiry.  I on the other hand as was far too crudely demonstrated, strongly encourage solid, fundamental, personal research. 

[knukles]

Google is a fucking miracle.
Did your mom log on for you?

[Ahmeexnal]

Bruce,

No mention about Iran's economy?

http://www.marketwatch.com/story/khomeinist-economics-2010-12-23?link=kiosk

The path Iran has now taken is being examined very closely by all western governments, as  it shall also be the only one available to them in the near future.

Expect POTUS to declare a fourfold increase in gasoline as "a great victory for democracy".

[knukles]

"declare a fourfold increase in gasoline as "a great victory for democracy"."

Immediately after nationalizing the industry.

[erik]

If economic growth stalls out, I don't see how copper will be a good store of value.  I also don't see the S&P hitting levels just below 1,500.  Remember that the S&P topped after oil first visited $90/barrel in late 2007.

I really like your call on QE, when it ends, treasury rates will drop, and that will be because economic growth will drop not because people like treasuries per se.  However, I see QE being forced to end sooner than June because oil prices will be above $100 and that will be politically unpalatable.

Thanks for your work this year, Bruce.

[AchtungAffen]

"Any senior with income of $200k will be impacted. The great socialization of Social Security will have begun. The popularity of this program will fall of a cliff."

With such an income, do you really need SS? What percentage of retirees actually have such income? If only a small percentage is "affected", will it weight on the program's popularity?

[Whatta]

Chevy Volt WILL sell well...cuz zerObama will see to it. The government will buy huge numbers of them. But, I'd luv to short GM in a true free market....in this market, however, not so much.

[Mercury]

Right, which means in about five years or so...when a beige Volt pulls in your driveway you'll know that the government has come to pay you an unwelcome visit.

How do you know dear?

Who else drives a fucking Volt?

[TuesdayBen]

Wow.  All this talk of violence, hunger, calamity, collapse in the next year.  At the same time, POTUS is working on a SnoCone in Hawaii... http://thenewnixon.org/wp-content/uploads/2008/08/obama-snow-cone.jpg

[LudwigVon]

That picture made me laugh out loud. The LEADER of men in the free world. What a joke. Put him in jail, he is not an native, certified to serve as head of our armed forces.

Ron Paul is.

[Uncle Remus]

DIY single-use EMP devices.

[Common_Cents22]

isnt the volt the car of the year?   BEFORE it sold one and has proven itself?   Kind of like Obama getting a Nobel in advance.   Things are surely upside down in the world.

I would ad to BK's posting that many of these predictions really hinge on the political climate and the back and forth jousting between parties.  Government invests for political return, not economic returns.  They have proven to kick cans down the road until crisis, just like Rahm Emmanuel said, take advantage of a crisis.   There aren't enough reform tea parties in CONgress to take bold action yet.

[the grateful un...]

some good calls in here I think.

the size of the toxic waste dump at Fannie and Freddie will be consolidated, making it seem as though the remaining entity is more solvent than it is. Time to buy?

On a number of political issues, take note, that as Republicans approach 2012 and a majority, they adopt statist policies. the love fest between the congressional GOP and Obama continues. as the left abandons him, he falls more and more under their control. they continue to bang away on social issues (Ron Paul's call to end the fed is a faint cry in the wilderness, his take no prisoners tone suddenly conciliatory - and as the party in control, the fed appears more useful to their purposes, which is more borrow and spend- and which explains why Kuchinich has taken up the cause - the end the Fed mantra is for political outsiders only)

the pain finally trickles down to small town America. the end of Babs, this gives the rural GOP vote more anger, and empowers that part of their base. They continue to win on the barbell approach, accommodative of the financial oligarchy on matter of regulation, and bailouts , while taking up the social causes, gays and especially immigration, for the poor rural folks. Now we didn't send your job to China, that Mexican took it!

when the markets get another whiff of deflation the indexes will all correct. That will not be good for gold either. the leading indicators for deflation argument is housing, and autos, which are being priced at levels shoppers can appreciate. For the long haul you want anything that looks and acts like a utility. But the cellphone craze dies down, people don't need Dick Tracy wrist radios, they need a real cop, and a real fireman. The fear of government oppression gives way to the reality that when you call 911, no one is home.

[Mercury]

Brazil will continue to shine as a resource rich country that runs a trade surplus and has low budget deficits.

I've kind of been falling for Canada for similar reasons lately (although I think they have a slight trade deficit these days).  Many ways to win up there.  Pretty solid banks too.

Solid list BK -  although I think the muni situation will be a BIG deal in 2011 even if things don't move as fast as MW thinks.

Volatility is definitely a buy here.

[DosZap]

I've kind of been falling for Canada for similar reasons lately (although I think they have a slight trade deficit these days).  Many ways to win up there.  Pretty solid banks too.

Canada has a major shitstorn brewing, their real estate bubble is popping, and the folks are spending loonies they do not have.

Their banks are stronger, but the crises coming is going to cause them a lot of pain.

Also,being so close to the US, our diseases will cross over to to them also.

[Dr. Porkchop]

Contrarian and Anti-Kool Aid blogger Garth Turner sums up the Canadian situation nicely:

http://www.greaterfool.ca/2010/12/26/five-lies/

"...As I wrote here a day or two ago, Canadians have fallen into a zombie-like repetition of the five big mistakes Americans made years ago.

We’ve pushed average home prices past the ability of average families to afford them. We’ve embraced lending standards so low people without money can buy houses. We’ve amassed historic levels of household debt. We’ve borrowed billions at sub-prime rates destined to rise. And now we’re sucking equity out of our houses to make ends meet.

These five realities make a lie of those who claim this country is populated with cautious, prudent, carrot-up-the butt, little boy scouts or buttoned-down bankers who only grant mortgages to virgins and Conservatives (quite often synonymous). In fact, why should similar actions have different outcomes?"

I read his blog fairly regularly and he is generally spot on. He hates PMs for some reason though.

[TruthInSunshine]

If Canada were a stock, I'd short it, and thusly.

It's not though. And I am not prepared to try and time the implosion of the components that comprise its basket of worth.

As far as real estate bubbles go, we had a 'Whopper' in the U.S., Canada is still amidst one (IMO), but the real Great White lurking out there is in China.

China has had a real estate bubble that will make the world's other tulips all look like tiny daisies when it truly bursts. Chanos has found his ultimate voice on this one, and he did Soprano pretty well before.

[Mercury]

Yeah I know everyone has pension problems and all that too.  It's just that with their natural resources, energy, minerals etc. it seems a like a good place to be in the event that emerging markets continue to drive demand for that and/or the U.S. inflates itself into the stratosphere and capital wants to hide in hard assets.

'Fastest of the slow crowd' is probably a better way to put it.

[Uncle Remus]

He said hard assets.

[piceridu]

This article was the complete opposite of John Mauldin Summarizes His Market Outlook http://www.zerohedge.com/article/john-mauldin-summarizes-his-market-outl...

BK you have balls. Thanks for laying them out for all to see.

[ElvisDog]

I like some of Mauldin's insights but his constant "Muddle through" refrain drives me crazy because it is a total cop-out.  It strikes me as Abbey Joseph Cohen-esque and is useless for investing purposes.

[delacroix]

bill bonner rules

[TruthInSunshine]

Bruce is one of the best 'guest writers' on ZH or anywhere else, for that matter.

I would take the opposite side of a fair number of these predictions, however, while I'm confident that both Bruce and I would acknowledge the folly of trying to make predictions over such a short term as one year.

In other words, and I'll only speak for myself (you're welcome, Bruce), I'm fairly confident anyone making such predictions is either a fool or is simply providing food for thought, and Bruce is far from a fool, in my opinion.

There is a beauty in Taleb's methodology of buying such deep OTM puts, because he's betting more closely on an adverse to severely adverse consequence on a long enough time frame, rather than a cataclysmic one on a short term horizon, though he profits under either scenario.

My one and only prediction I'll make with any degree of confidence for 2011: Higher than usual volatility awaits.

Please do call me on this in 2012 if this call turns out badly.

[Clapham Junction]

My top ten:

1) Zero Hedge will expand its clothing line to include jackets, hats and boots.

2) Liberal Sodomy will convert to Judaism, again, while continuing to make her usual posts.

3) I will remain mostly in cash, while adding to my position in Pork Bellies.

4) Bernanke will marry a Hollywood actress after a bizarre series of events.

5) Bob Prechter will be 100% correct about something, by accident.

6) A remake of "Drums in the Deep South" will be announced, directed by Mel Gibson.

7) The price of junk silver bags will plummet as investors discover they are really filled with metal slugs.

8) Cramer will be 100% correct about something, by accident.

9) Iran will open four Starbucks, three McDonald's and one Dunkin' Doughnuts as part of a   new trade agreement with Israel. (The Jews control those vast empires, you know.)

10) "Experts" will continue to pontificate and predict the future, and most of us will still be   stupid enough to read and comment on them.

[knukles]

Most excellent.
Multiple Kudos
The teeming masses contract apoplexy from a mere forecast.
Imagine if something real happened.

[Sean7k]

LOL. You forgot lingerie, Robo has a new line to be introduced and carried by Harry Wanker as his stores explode across America in an employment Festivus!

[crzyhun]

Better do thge pork quick cause the pit is almost non-compes menti!

[cosmictrainwreck]

Excellent! Thanks for a little "comic relief" in all this BS

[Shameful]

Bruce,

How can Bernanke step away from QE2 and not go into QE3?  We all know it's a failure but how can he step away?  It leaves the US Treasury market without public support and it's not like funding 1.4T+ a year is easy for a increasingly bankrupt globe.  Also from a history side it ruins Bernanke.  It show a time when he "wises up" meaning that he is in the know when he makes further errors.  Now look at Havenstien went to his deathbed blaming speculators and others for the Reichsmarks problems not his insane printing to fund the government.  To this day a few loonies actually believe him and it gave him a degree of cover while alive.  To renege on QE would mean that Bernanke would have to more or less admit to history that he was wrong.  Now we all know he is wrong, but after all the MSM still holds the Fed in awe.

[lewy14]

Look. This is the situation.

Contrary to received paranoia, "the elites" are not one team, and they do not decide everything behind closed doors.

There are many teams, and to the extent they do coordinate, it is through stigmergetic signaling. Hidden in plain sight.

It's not too hard to read those signals with practice.

The other teams have informed the benbernank that QE3 would be past the threshold for global defection from the Dollar - the game will be over.

You assume Ben is worried about his credibility - that was forfeit already - sub-prime wasn't exactly contained, was it?

Excellence in making shit up is the primary skill of a central banker. His actions are already constrained; his exact justifications for them are all that await events.

[tmosley]

There will be a run on silver, first at the LBMA, which will quickly spread to the COMEX, as early as Q1 (it ALMOST happened in December, real inventories must be down to a bare minimum).

There WILL be a QE3, but it will have a new target, municipal and state bonds.  The states have to be "saved" somehow.

There will be gridlock in Congress.  Nothing but pork laden bills will get through.

In response to the congressional gridlock, bureaucrats will begin legislation via regulation, likely at the behest of the Obama administration.  Regulatory agencies will at least attempt to seize control of huge swaths of modern life, including the internet at the least.  Look for some form of house to house "compliance" searches by the end of the year.  This will be hailed as a job creator.

Guns remain legal, but ammunition will become increasingly expensive, despite increased manufacturing capacity, due to regulations.  It will be harder to buy a gun within 500 miles of the southern border.

Small businesses will continue to flounder, as increasing regulatory burdens put many out of business.

Tensions will continue to escalate with China as idiots blame the results of our crappy policies on the Yellow Menace.  

Capitalism and Communism continue to trade definitions.

Protectionism will rise again in a big way.  An analogue to Smoot-Hawley Tariff Act will be proposed, and voted down.  A second version with a great deal of pork will pass by a narrow margin, though it might not be this year.  When it does pass, we will see a financial panic, though stock indexes probably won't reflect it, as by the time it happens there will be only a tiny residual amount of retail investment there (same in the bond market).  It will instead be reflected in a massive run on gold and silver.

There will be food riots.  In America.  Mobs will take over at least one foreign government by storming government buildings.  They will make things in that country much worse than they were.

Germany will, by threat of abandoning the Euro, take full control of the ECB and institute extreme austerity measures.  Peripheral countries will abandon the Euro as their cities burn.  They may leave the EU altogether.  Not sure on that.

There will be increased propaganda against "militias" and "patriots".  Sometime in the next three years, there will be another "Waco" type incident.  Afterwards, there will be an insurgency inside the US.  Crackdowns will not have the intended effect.  

Economic problems will be blamed on militia and patriot groups.  The FBI will escalate their tracking programs on anyone associated with Ron Paul or any other "far right" personalities.

There is a significant possibility of a false flag attack in the next year that comes in the form of a political assassination.  This risk is probably less than 10% next year, but it will by MUCH higher in 2012.  This will be intended to abate the loss of voting power to third parties/a Republican party lead by Ron Paul.

All in all, it promises to be a scary, shitty, deadly, opportunity filled year.

[Lord Koos]

An asteroid will hit the USA, right on top of Chicago, sometime in Q2.