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David Rosenberg's 10 Themes For 2011

Tyler Durden's picture


From Gluskin Sheff's David Rosenberg


  1. Consensus views of 1,350 on the S&P 500 and 4% real GDP growth are far too high. Not one strategist polled by Bloomberg is bearish on equities. So we have a complacency problem on our hands, the exact opposite of what we experienced at the March 2009 and the July 2010 lows. For that reason, the outlook for at least the first half of 2011 is less than positive.

    Moreover, equities are at the high end of the range and are priced for good news on earnings and economic growth. Valuations are not at extremes (however, according to the Shiller normalized P/E ratio the market is still on the expensive side) but sentiment is. Negative divergences are increasingly apparent and momentum is actually subsiding. We see better buying opportunities ahead but continue to favour companies that are “special situations” — consistent dividend growth, undervalued, strong balance sheets, and non-cyclical in the sense that they have low correlations with the direction of North American growth. Negative divergences are increasingly apparent and momentum is actually subsiding.

  2. In my view, real GDP growth in the U.S.A. is set to slow from around 3% in 2010 to 2% in 2011, or possibly even lower. This is not a double-dip but it is a slower growth profile. We went to 3% in 2010 from -2.6% in 2009 so the second derivative was positive. But for the coming year, the second derivative is likely going to decline. This augurs for a non-cyclical exposure; more defensive and still yield-oriented. As the Bank of Canada strongly suggested, global growth is going to slow and hence a sense of caution over global multinational cyclicals is warranted.
  3. The fiscal and sovereign credit problems in Europe are not going away. Neither is the instability in the U.S. state and local government sector. Policy tightening in China is also a source of uncertainty. Volatility is likely to intensify with this outlook.
  4. The U.S. dollar is likely to strengthen, particularly versus the yen (the Bank of Japan and Ministry of Finance want the overvalued yen to weaken) and the euro (they need it since Eurozone is tightening fiscal policy more dramatically).
  5. Emerging markets will struggle as central banks move more forcefully to curb accelerating inflationary pressure. The Chinese stock market may have already signalled that a major top in the region has been achieved.
  6. The U.S. fiscal borrowing need for 2011 is no higher than it was for 2010. As such, fiscal concerns in terms of what it means for lower long-term rates are misguided. The yield curve is too steep and will flatten, led by lower bond yields. The recent increase in long-term rates is very similar to what we saw happen in December 2009 and helped ensure that bonds would enjoy a year of positive returns in 2010.
  7. The Canadian dollar is overvalued by at least five cents and is likely to succumb to a softer profile for commodity prices. Basic materials appear over-owned in the short-term and bullish sentiment is at a high. The policy tightening effect out of emerging Asia is an obstacle, especially at current price levels. There is likely an election in Canada and the U.S.A. will not be beset by political uncertainty until 2012. Hence some caution as it pertains to the outlook for the loonie (though I would look to get more positive at 93 cents).
  8. Deflation remains the primary intermediate risk for the U.S., notwithstanding the prospect of a near-term follow-through from the recent surge in many commodity prices. Money velocity remains dormant despite the Fed’s reflation efforts. There remains far too much excess capacity in the labour market. This requires an ongoing focus on SIRP (safety and income at a reasonable price) strategies for investors.
  9. Corporate bonds are no longer inexpensive but within this space, financials and utilities screen best for value in terms of sectors, the 5-7 year part of the curve in terms of duration, and the BBB-BB area in terms of ratings.
  10. One of the most pronounced macro risks is another leg down in U.S. home prices, which actually seems to be underway but is currently receiving very little attention.

Our preferred “buy list” are out-of-favour groups that are not priced for accelerating growth: Utilities, pipelines, oil income, pharmaceuticals (dividend focus as well as being out of favour), food products, and grocery stores.


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Fri, 12/10/2010 - 15:51 | 796597 Larry Darrell
Larry Darrell's picture

You forgot the skittles........or is that covered by the rainbow?

 "real GDP growth in the U.S.A."..........when was the last time we had REAL growth, and I'm not talking about monetary or debt driven.

Fri, 12/10/2010 - 15:59 | 796658 Thomas
Thomas's picture

"You forgot the Skittles". Very funny.

Fri, 12/10/2010 - 16:14 | 796717 SheepDog-One
SheepDog-One's picture

I guess it was just assumed Harry, Robo, and the Wall St whores unicorns shit Skittles.

Fri, 12/10/2010 - 16:25 | 796776 Andy_Jackson_Jihad
Andy_Jackson_Jihad's picture

I thought Obama shit them.  Right after the unicorns but before the puppy dogs.  In 2008 that college kid swore he did!  He said its just hard to see with the unicorns running around.

Fri, 12/10/2010 - 16:31 | 796808 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I don't understand why everyone is so down on Harry and Robo.  The best way to avoid the errors of groupthink is to welcome diversity of opinion.  Maybe wall street whore are very naughty people, but that won't keep me from trying to find the best total return.  I'll run with the whores when necessary.  Why would any objective investor do otherwise?

Fri, 12/10/2010 - 19:42 | 797437 Raymond K Hessel
Raymond K Hessel's picture

Real GDP growth is the sum of the inflation rate and the nominal GDP rate.... has this website become a shithole for ass-sniffing Marxist turdmunchers? 

Fri, 12/10/2010 - 15:49 | 796611 haskelslocal
haskelslocal's picture

Prefered buy list... Grocery stores. First up? A&P at a bargain...

Fri, 12/10/2010 - 17:51 | 797124 Clayton Bigsby
Clayton Bigsby's picture

lol - that was my first thought as well...

Fri, 12/10/2010 - 15:50 | 796613 littlebuddy
littlebuddy's picture

now's a good time to recant unseen 2010 predictions.

Fri, 12/10/2010 - 16:02 | 796675 Henry Chinaski
Henry Chinaski's picture

now's a good time to recant unseen 2010 predictions.

That's what I was thinking.

And these 2011 predictions aren't all that bad.  Now I am second guessing my plan to keep hoarding food, firearms and precious metals.

Fri, 12/10/2010 - 16:12 | 796706 toathis
toathis's picture

yeah, nothing is coming.

I love the Bernanke hate, very misguided.

HE WAS CORRECT! He saved our behinds from another Depression and War

CNBC was right! No Double-Dip, no nothing!

Gold is a bubble. The Recession is over. The dollar isn't going anywhere.

Fri, 12/10/2010 - 16:30 | 796801 What a mess_man
What a mess_man's picture

toathis ... Dude, Bernanke is never correct.  Never.  Every economic prognostication the man has ever made has turned out to be as wrong as his thesis.  How can you say he saved our behinds from another Depression and war?  This history has yet to be written.  Also, many would argue that we are and have been in a depression for the better part of 2 years now.  Of course you can look at the bogus figures the gubbermint puts out and claim "recovery!", or you can look at that "growth" which has come about as a result of Ben's massive monetary injections and take that away from real organic growth (i.e. the facts) and say 'yep, looks like a depression'.

Fri, 12/10/2010 - 18:07 | 797175 Al Gorerhythm
Al Gorerhythm's picture

and he cured the world of all diseases and he increased the purchasing power of our money and he created 42 million new jobs and he printed the nation out of debt and he increased the value of stocks to record highs and he created gold paved highways and candy rock mountains and got us all singing and dancing in the streets to the tunes of "Sugar Sugar", and Tiptoe Through The Tulips.

I don't see a bubble in gold yet. When Johnny Bravo is standing in the Gold Window line at the local coin store, that's when it will be a bubble.

When you are standing in line to get gold, I'll know it's long past worrying about my sell decision.

Sat, 12/11/2010 - 00:23 | 798087 Al Gorerhythm
Al Gorerhythm's picture

One by one, heads are turning. If this doesn't turn yours, then you are a troll. If this does not set you off on a path to truth, then you are a troll. If this does not generate a volcano of outrage, then you are not paying attention and are therefore a troll.

Sat, 12/11/2010 - 02:33 | 798264 Bolweevil
Bolweevil's picture

That link almost f&$ked up my Christmas.

Sat, 12/11/2010 - 09:03 | 798405 blindfaith
blindfaith's picture

great, wonderful, what the hell is anyone going to do about any of it?  They are untouchable and have bought everyone needed to be sure they susceed.  By the time, anyone is in a position to stop it, the valts will be empty and AMERICANS will have a debt that can not be paid off...ever.

As my dentist said to me this week, how can we really stop it?

It is 1934, and Mr Rosenberg has his head in the clouds.

Fri, 12/10/2010 - 16:43 | 796853 the rookie cynic
the rookie cynic's picture

I'd be happy to trade you my JPM and GS shares for any .308 shells, Kruggerands, or Spam you want to part with.

Fri, 12/10/2010 - 16:09 | 796699 tahoebumsmith
tahoebumsmith's picture

Good point as we have seen many unseen 2010 predictions. However the reason for that is nobody in their right mind would have predicted the FED and the ECB would go another 8 TRILLION in debt to prove us wrong. That is really what it boils down to, nobody can predict anything anymore because the cover-up will continue as long as the Elites can keep sucking us dry and the government will allow the FED to continue printing. Every action has consequences, are you ready to face ours once the printing presses are turned off? Just remember every unseen prediction has been stick saved by a bailout...EVERYONE OF THEM! So eventually the curtain will be pulled back and the lip quivering wizard will be exposed for what he really is, nothing more then an ink covered coward that robbed America blind.

Fri, 12/10/2010 - 16:16 | 796723 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 tahoe

NONE of our fundamental problems have been solved.  NO ONE (of significance)  has gone to jail through this financial disaster.


@ Henry above, don´t feel bad buying gold.  Feel tranquil instead.  You will sleep well tonight.

Fri, 12/10/2010 - 17:10 | 796973 hidingfromhelis
hidingfromhelis's picture

+1 Suburban...brought to you by Gov't Motors!

Sat, 12/11/2010 - 09:23 | 798415 blindfaith
blindfaith's picture

I have written words along this line on Zh before.

Until, for some situation yet to happen, martial law is declared, nothing will change or be stopped.  How can anything be changed when the government is as corrupt as the banks and brokers, fund managers, corporate leaders, the media?  The corruption is so entrenched in America that most Americans can't see it because it has become a part of daily is expected.  TV shows, video games, movies, on the is how we are being brainwashed to be.  You even see hero worship and the desire to walk in those shoes.


Until such time as the military has had a snoot full and feels jeopardize that its ability to pay its troops or purchase needed supplies is threatened,  until such time that the military feels that the civilian government and enterprise has 'weapons of mass destruction'...until, that is when all this mess will end.  NO other power has the ability to change anything but the military, so don't kid yourself.  But, then ....the question becomes will George Washington or Dwight D Eisenhower then emerge?

Sat, 12/11/2010 - 18:38 | 799235 puckles
puckles's picture

A military takeover is extremely unlikely.  Martial law, however, at some point, is very likely; occasioned by yet another Reichstag fire event, and commanded by the duly elected powers.

Fri, 12/10/2010 - 15:51 | 796622 Midas
Midas's picture

My buddy Harry says you should take a look at apple.  (Don't worry about the price)

Fri, 12/10/2010 - 15:58 | 796659 Robslob
Robslob's picture

Tough call on Apple...5 shares at $320 or buy 2 iPads?

Fri, 12/10/2010 - 16:06 | 796684 CPL
CPL's picture

Apples have a great return.  Two trees to cross pollinate for around 40 bucks a piece equals $1000 in apples.


Oh wait, you're talking about the shit hole of a company called apple...pardon me

Fri, 12/10/2010 - 18:07 | 797177 malusDiaz
malusDiaz's picture

I planted an orchard in the back yard, average cost was below 15$ a tree, 25+

Fri, 12/10/2010 - 16:25 | 796777 HarryWanger
HarryWanger's picture

AAPL is priced very fairly here and is relatively cheap. Watch next earnings report, which will be stellar, and you'll see over 350 in a heartbeat.

Fri, 12/10/2010 - 16:28 | 796791 SheepDog-One
SheepDog-One's picture

Harry Im supposed to pack up and move to the Twin Cities based upon THIS info you sent about your many job openings (8-12)?


Hello, We will be hiring at our Twin Cities facility located in Minneapolis at the end of Q1 2011. Right now we anticipate 8-12 new full time positions. If you are serious, I can give you a more detailed description of the jobs available. When I refer to adding "dozens of retail outlets", they are distributors who own their outlets. We sell to them. We've added retailers in Las Vegas, Seattle, Chicago and New York this Fall in addition to the current retailers. That impacts distribution and manufacturing on my end, hence the move to hire in Q1/Q2. HW

Fri, 12/10/2010 - 17:15 | 796984 reading
reading's picture

For every hiring, there are a few more firings...

T.J. Maxx parent to cut 4,400 jobs 

TJX Companies said on Friday that it is eliminating 4,400 jobs "to improve the overall profitability of the company."

Fri, 12/10/2010 - 17:13 | 796974 tahoebumsmith
tahoebumsmith's picture

Alright Harry I'll let you in on a good stock tip..( SHW) With talks of QE3 happening just weeks after the introduction of QE2, spackle and paint sales should hit an all time high.


Sat, 12/11/2010 - 00:03 | 798053 DoctoRx
DoctoRx's picture

Agree w HW!  I have been saying on this site since the summer that AAPL is a classic GARP stock.  Note David Einhorn big into AAPL now.

And I've begun to think Rosie sounds almost insane.  Oh, no big deal, deficit for 2011 just as disgusting as for 2010- and unsaid is that both will be monetized -- now why didn't the Weimar Republic work out well in its money-printing orgy?  Buy bonds because contrary to hopes/expectations, the USG is using more and more Grecian Formula?  WTF?

Fri, 12/10/2010 - 15:59 | 796657 Quixotic_Not
Quixotic_Not's picture

Penny stocks from heaven FTW?

Fri, 12/10/2010 - 15:59 | 796660 sheep92
sheep92's picture

It is telling that even though he see not a single equity analyst bearish he too ends his commentary with his 'preferred buy list'.

So to whom is he going to sell this buy list ?


Fri, 12/10/2010 - 16:03 | 796661 CPL
CPL's picture

Good calls, wild cards not-withstanding.

Cancuck buck should, and I say "should" be around 68 cents on the USD, the problem is overpricing basics food stuffs and energy.

Right now our primary consumer of electricity is taking an ass kicking on cost to the tune of nearly 80% of the energy sold over the wire byt draconian energy contracts tot he south of the border.  Yes I understand it's not in Canuck interests, but Canada sells a lot of electricity over the border and there are a lot of cousins in a shitty place because they can't pay their heating bills...however

The food stuffs is obvious.  Costs in energy like ripples in a pond make it troublesome to find where the center of the cost is incurring because the pond ripple has back splashed from the shore and back into the rest of the pond.  With zero possibility of it calming down, expect food prices to double the same time by next year.

While the US produces a lot of food, it is heavily dependent on imported food.  In terms of time the US can feed itself, if it behaved itself and didn't sell food to anyone, for around six months out of a year.  Places like england might make it for three weeks.

There is a heavy dependence on places like Australia, Russia, Canada, Brazil and Argentina to provide the shortfalls in the production of food for the western world.

Fri, 12/10/2010 - 16:41 | 796849 MrSteve
MrSteve's picture

The USDA report on imported food trends, 1998-2007 shows the ballpark volume of imported food about doubling in ten years.

Your expectations of food prices doubling in a year is some kind of bad typo or a crazy prediction. Do you expect people will start buying half-gallons and half-quarts of milk and 1/8 pounder hamburgers for the same price as today's put-ups?

Fri, 12/10/2010 - 16:58 | 796893 GoinFawr
GoinFawr's picture

"Cancuck buck should, and I say "should" be around 68 cents on the USD, the problem is overpricing basics food stuffs and energy."

Yah ok. That four bit and change assessment is based on what? The fact that the 1967 Canadian quarter is only 80% silver compared to the 90% of the American quarter minted the same year? I've got news for ya bud: it ain't 1967, these days the loonie is just junk metal, and the USD nothing more than linen/paper/mylar/whatever with contradictory mythical symbols printed on it.

I mean, that ratio sure isn't  based on fiscal prudence by any metric I use to measure. But maybe I am completely missing something, so feel free to enlighten me.



Fri, 12/10/2010 - 16:00 | 796669 Questionmark
Questionmark's picture

What is this guy smoking? We're not even hitting 3% in nominal terms, much less real.

Fri, 12/10/2010 - 16:17 | 796726 SheepDog-One
SheepDog-One's picture

Remove dollar printing at -0-% and monetizing, GDP is a big negative print.

Fri, 12/10/2010 - 16:03 | 796678 DisparityFlux
DisparityFlux's picture

What about commercial real estate loan defaults in 2011?  How does slow growth and far to much excess labor capacity mitigate this?

Fri, 12/10/2010 - 16:14 | 796711 Rogerwilco
Rogerwilco's picture

Yeah, CRE has been swept under the rug. They hold their noses and roll the loans over. Tomorrow never comes in the land of milk and honey.

Fri, 12/10/2010 - 17:51 | 797120 TheProphet
TheProphet's picture

They're not even rolling the loans over. They're just pretending they don't exist so they don't have to foreclose.

If they rolled them over they might have to acknowledge their decrease in value and mark them to market. And you know for sure that's not happening.

"If I close my eyes, you cant see me" is a great strategy... if you're my cat. Otherwise, it's a path to destruction. Right now, it's a waiting game.

Fri, 12/10/2010 - 17:51 | 797121 TheProphet
TheProphet's picture

They're not even rolling the loans over. They're just pretending they don't exist so they don't have to foreclose.

If they rolled them over they might have to acknowledge their decrease in value and mark them to market. And you know for sure that's not happening.

"If I close my eyes, you cant see me" is a great strategy... if you're my cat. Otherwise, it's a path to destruction. Right now, it's a waiting game.

Fri, 12/10/2010 - 16:18 | 796719 toathis
toathis's picture

there is no "Excess labor capacity", head to China.

The fact of the matter is, people don't like to work. There is no reason to work when the government prints money and hands it out.


This is a shout-out to all the doomers that were dead stinking wrong.

All that flag wavings and shouting from the front lawn at the WH, did the collapse come... nope!

Tim Geither= best treasury security in history. SAVED US! Got that yet, folks?

___ bless Mr. Geithner. Let us hope he recovers as fast as our economy has under his excellent leadership! (no homo)

Fri, 12/10/2010 - 16:18 | 796736 Rogerwilco
Rogerwilco's picture

Were you a big fan of Webvan and Unsustainable is unsustainable, the money (or access to it) eventually runs out.

Fri, 12/10/2010 - 16:25 | 796778 CPL
CPL's picture

I think he was speaking in terms of irony and sarcasim under a rant., and  Actually worked on a contract for them all, they weren't the worst business shit holes thought can name around twenty that were just simply awful ideas.

Fri, 12/10/2010 - 16:29 | 796793 AccreditedEYE
AccreditedEYE's picture

Roger, this dude's a troll. (or just insanely sarcastic, at which point his posts become pretty hilarious) Per akak, don't feed the trolls. (I still feel dirty for feeding Harry earlier...)

Fri, 12/10/2010 - 23:49 | 798015 UninterestedObserver
UninterestedObserver's picture

You're just a douchebag - I hope you die.

Fri, 12/10/2010 - 16:18 | 796738 CPL
CPL's picture

the wild card of over population and excess population is part of the model, it will just be summarily ignored as usual.

Fri, 12/10/2010 - 16:51 | 796877 TheGoodDoctor
TheGoodDoctor's picture

Actually enriching the third world will naturally curb excess population growth. That is the near term end game. It happened to Europe. It happened to the US. And probably Japan too.

Fri, 12/10/2010 - 16:06 | 796689 doolittlegeorge
doolittlegeorge's picture

simple default remains the primary it has all year.  needless to say "the federal government has never fulfilled a single obligation since the Vietnam war" so "trying to print prosperity" is as predictable as how Vietnam would end.  only the vaingloriously deluded see it otherwise and i sense "as his trades get reversed he has an obvious tendency to double down."  we'll see how the "risk management department" responds.  there's "always a dissenter when we're talking obvious cataclysm."  needless to say i have not advised liquidation of the portfolio.

Fri, 12/10/2010 - 16:06 | 796693 Prof Gulliver
Prof Gulliver's picture

Geez, after the year Rosie had in 2010, you'd think he'd have the modesty to not post any more predictions. But I guess he gets paid to bloviate. He sure shouldn't get paid for his performance.

Fri, 12/10/2010 - 16:15 | 796722 Yardfarmer
Yardfarmer's picture

 +1, mere common sense, professor, something in distinctly short supply these days.

Fri, 12/10/2010 - 16:23 | 796766 HarryWanger
HarryWanger's picture

Exactly, he's had a terrible year forecasting. Although he has been long PMs which is good. Everything else has been a nightmare for all of these doom guys.

I'll call him on that 1350 bet. We'll easily hit that in 2011. Not a doubt in my mind unless something huge on a macro scale sets it back (big terrorist attack in US, war with Iran, Korean War, etc.) But as we've seen, it's all been saber rattling to this point, why would that change next year??

Fri, 12/10/2010 - 16:27 | 796790 CPL
CPL's picture

Wild cards are a bitch, impossible to figure out how mixing it up turns out.

Fri, 12/10/2010 - 16:30 | 796800 SheepDog-One
SheepDog-One's picture

Harry this is all the info youre willing to say about your wildly expanding (8-12 job openings) and someone is supposed to just drive there and look around until they spot you? Whats the name of this company? 


Hello, We will be hiring at our Twin Cities facility located in Minneapolis at the end of Q1 2011. Right now we anticipate 8-12 new full time positions. If you are serious, I can give you a more detailed description of the jobs available. When I refer to adding "dozens of retail outlets", they are distributors who own their outlets. We sell to them. We've added retailers in Las Vegas, Seattle, Chicago and New York this Fall in addition to the current retailers. That impacts distribution and manufacturing on my end, hence the move to hire in Q1/Q2. HW

Fri, 12/10/2010 - 16:36 | 796822 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

job openings are unnecessary for the s and p to hit 1350. 

Fri, 12/10/2010 - 16:38 | 796834 SheepDog-One
SheepDog-One's picture

Right, all thats needed today for market rallies is retarded americans with their IGadgets.

Fri, 12/10/2010 - 16:52 | 796883 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

I will take a positive real return any way I can!  Retarded American and Igadgets notwithstanding, but this androids are so cool.  I'm like totally connected to Tyler Durden in real time!  I really think qe3 and some positive surprises will carry the day, temporarily, but I am grain-feeding a couple of crows for a tasty dinner just in case.  More tender and succulent that way.

Fri, 12/10/2010 - 23:52 | 798019 UninterestedObserver
UninterestedObserver's picture

You plan on eating Crow? Was that a freudian slip?

Fri, 12/10/2010 - 16:39 | 796840 kornholio
kornholio's picture

So, the only way the market goes down is, " big terrorist attack in US, war with Iran, Korean War, etc.". Boy I am REALLY bullish now! Thanks Wanger. DOW 3600 in NO TIME YIPPY.


Sat, 12/11/2010 - 00:32 | 798111 shano
shano's picture

Secondary mortgage market coming due?

Commercial real estate.....have you seen the empty storefronts everywhere?

  Wikileaks about TBTF banks.

Commodity spikes.  State debts.  etc et al.

Sat, 12/11/2010 - 16:30 | 799011 jm
jm's picture

You don't know what you are talking about re: the year he had.  As to predictions, you're spot on.

Performance:  One, he's a strategist as well as chief economist, so I'm not sure how you can compare his NAV to anything but an imaginary benchmark.  Two, bonds weren't exactly in the dumper in 2010.  Just because bonds are somewhat expensive doesn't mean that equities are cheap.  Third, another major investment theme of his, commodities, gave you plenty of equity-like exposure.  

So he thinks Spoo is too expensive as an index.  It doesn't mean he rejected equities as an asset class.  His advice has been consistently value-oriented, which is pretty good for most, unless you want to dry-hump Netflix of Citi and such all day.

Prediction is impossible, but he did provide intelligent commentary and analysis of public data.  This is all one should ask of an economist that doesn't work for a firm with inside information.  He focussed too much on the macro tails.

Fri, 12/10/2010 - 16:13 | 796710 goldmiddelfinger
goldmiddelfinger's picture

Maria Caruso Cabrera's brain could easily fit into a sparrow's undialated asshole without touching the sides

Fri, 12/10/2010 - 17:18 | 797000 doolittlegeorge
doolittlegeorge's picture

are you Ted Kennedy now?

Fri, 12/10/2010 - 16:16 | 796724 Return2Sanity
Return2Sanity's picture

Here's one more theme for 2011: Banks find sneaky way to reclaim their legal right to foreclose on homeowners by buying property tax debt at auction. After they take their share of the sales proceeds (including interest, fees and penalties, of course) there will conveniently be nothing left over for the holders of the mortgage. Expect the Fed to encounter a little trouble withdrawing liquidity since their stockpile of MBS will be rendered worthless by this. Yep, it's already happening:



Fri, 12/10/2010 - 16:19 | 796739 Aunty Christ
Aunty Christ's picture

According to Rosenberg, the US real GDP is set to slow from 3% to 2%? Is this the same assclown that has been predicting continued recession this year? Keep it up, Rosie, the value of your forecasts are starting to become almost perfectly inversely correlated to investment returns

Fri, 12/10/2010 - 23:56 | 798032 UninterestedObserver
UninterestedObserver's picture

Gold up 22% for the year and Silver up 59% which is better than the US Equities assclown

Fri, 12/10/2010 - 16:20 | 796744 RSDallas
RSDallas's picture

He sounds more bullish than he ever has????????

Fri, 12/10/2010 - 16:21 | 796748 kornholio
kornholio's picture

SO, Rosenberg is now bullish? 

Fri, 12/10/2010 - 16:27 | 796785 sheep92
sheep92's picture

Of course he is.  It's either that or no more clients.

Funny the way this works.

Fri, 12/10/2010 - 16:22 | 796760 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

Deflation is still the biggest risk according to this dude.  More qe2 and deficit spending please! Don't fear the inflation reaper just yet!  Is this an intermediate top for gold and silver?  Have the real contrarians already sold gold and silver and are heading for the USO and spx?  Brazil is not a china story so I stand by my purchase of EWZ at 74.83 or something like that.   If I'm wrong I will gladly prepare a fine dinner of crow and videotape it for your viewing pleasure.

Fri, 12/10/2010 - 16:25 | 796779 Cdad
Cdad's picture

Considering where oil is [ironically on a day when it did not get invited to the mindless rally party based on GE paying a 14 cent dividend], I am having a hard time putting together a good scenario for the S&P post China's decision to hold or raise rates.

If they hike, the reaction should be violent due to commodity price movements down.  Should they hold rates steady, oil jumps and gas smacks US consumers who are already skittish as they, I guess, prepare to mindlessly buy mindless and useless [both] crap from US malls [teetering close to bankruptcy] during this, the year of "self gifting." 

Considering that the criminal syndicate known as Wall Street has now, this week, rallied all the garbage stocks...I mean bank stocks...I'm not sure I understand the current market permabull setup for Monday.  That is if the US federal government does not announce a surprise bankruptcy on Sunday night...or perhaps the EU beats us to that punch.  

Just thinking out loud I guess, but I'm sure Robo will straighten me out with a chart of something that has already happened as some sort of prescient prognosticator of the future.  And I will finally see the the WHITE IPHONE 4 light. 

I confess, however, that I am feeling light-headed because...I was transfixed this morniing on the SPY as it simply floated upward on invisible bids resulting in today's invisible volume...while I waited for tax legislation to preserve something we have had for ten years which, I guess, will create millions of jobs if it remains the same.

Do I have this correct?  Anyone....anyone...Bueller....Bueller...

Fri, 12/10/2010 - 16:36 | 796824 SheepDog-One
SheepDog-One's picture

Hmm yes seems to about cover it! Keeping tax rates the same as the last decade apparently is deemed a tax cut and will create many billions of jobs. No typo there, why not say billions? Nothing else matters so go for it! Of course cutting BAB has no effect, China raising rates is a big yawner, taxes may in fact rise if they dont extend and that means nothing, budget deficit climbs by billions and doesnt shave off even 1 point...all is well buy Apple!! Yea all is well, until it suddenly isnt and Im not going to be holding anything when that disaster hits.

Fri, 12/10/2010 - 16:42 | 796851 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

ok I'll bite.  The china move has been well telegraphed and is mostly priced in, mostly. It's purely cosmetic and won't be large enough to slow down the China story.  That's my take anyway.  I may be wrong in the USO but I think the wanger is right about the spx.  Maybe not 1350 though.  I'm probably bailing out at 1300 and looking for the next move, maybe it will be time for gold and silver again?

Fri, 12/10/2010 - 20:11 | 797505 kubrick007
kubrick007's picture

currency traders that i trust seem to think it is baked in unless the hike is more than predicted...but u never know with these things. as far as how high it can go, it's not worth predicting it that far...but as it rises higher and higher, my allocations will drop and drop and the stop-losses will tighten. until then enjoy the ride!

Fri, 12/10/2010 - 16:28 | 796792 Milestones
Milestones's picture

Lovely color of Pollyannya paint.    Milestones

Fri, 12/10/2010 - 16:36 | 796828 SheepDog-One
SheepDog-One's picture

Yes and many are getting the new 'rose colored Lasik' as well.

Fri, 12/10/2010 - 16:36 | 796826 What_Me_Worry
What_Me_Worry's picture

2011 WAG:

Silver touches $40

Unemployment benefits extended for everyone until age 62

Someone eats all of their gold, out of spite

QE3 announced

People talk about how big QE4 will need to be

Zero TBTF executives are indicted

Gas averages $3.51 this summer

Fri, 12/10/2010 - 16:46 | 796857 Biggus Dickus Jr.
Biggus Dickus Jr.'s picture

and s and p will be 1550 on the announcement of qe4!  I don't give a fawk about the price of gas.  I'm long energy right now.  Sold my silver and gold and waiting for a correction, praying for one actually.  I may have messed up on that move.

Sat, 12/11/2010 - 00:00 | 798043 UninterestedObserver
UninterestedObserver's picture

That all sounds possible by March, except the gas part...

Fri, 12/10/2010 - 16:41 | 796846 SheepDog-One
SheepDog-One's picture

All the bears now the fuck out below.

Fri, 12/10/2010 - 16:44 | 796859 pat53
pat53's picture

LOL, Here is the investment theme for 2011.... DO THE OPPOSITE OF WHAT ROSENBERG EXPECTS AND YOU'LL DO WELL. !! How this guy has the balls to come out and make ANY kind of call on ANY market is beyond me. He is a complete and total buffoon who is absolutely clueless about .... eveything !!  LOL

Fri, 12/10/2010 - 19:02 | 797324 CrashisOptimistic
CrashisOptimistic's picture

I am pretty sure he's been profoundly correct about both bonds and gold all year.  Huge moves in both.  Don't know if he's out of bonds yet, but he's been powerfully right about them from 1 Jan.

Sat, 12/11/2010 - 00:01 | 798049 UninterestedObserver
UninterestedObserver's picture

LOL why because the Dow is up? I bet you own mutual funds...

Fri, 12/10/2010 - 17:07 | 796956 knukles
knukles's picture

What about:

Nothing has fucking changed except the color of band-aids applied to the open cancerous running lesions, the colors of the jerseys of the team scrumming in DC (try connect the dot), so why the hell expect anything else than another year of the same old shit? 

Fri, 12/10/2010 - 17:22 | 797017 doolittlegeorge
doolittlegeorge's picture

"This Time is Different."  It's a double entrende and indeed says both "all to well" in the sense that "this debt collapse both proceeds like so many before them" and "unlike anything that has proceeded before."  When the British Empire imploded they didn't have nuclear weapons...and neither did anyone else.

Fri, 12/10/2010 - 17:33 | 797050 knukles
knukles's picture

So you see Smedley old boy, that this time t'is quite different than the last which once upon the morow shall seem as only yesterday when we simply might regaile the present.  The war in the east goes well I hear, eh-what?
But reminds me of Churchill's famous response to the insolent backbencher when asked of the cultural influence of Her Majesty's Navy aptly summed up by the old git as; "Rum, the lash, and buggery."

Fri, 12/10/2010 - 17:11 | 796970 KickIce
KickIce's picture

11.  China dumps the dollar.  Even if it does gain strength in the short run, they know long term we are running a scam.  If I were them, and the dollar stengthened, I'd dump every dime into commodities.  (judging from World King News, this is a WIP already)


Fri, 12/10/2010 - 17:36 | 797063 bbtrader
bbtrader's picture

Right now it's not in China's best interest to dump the dollar.  A strong dollar allows them to buy assets of other countries whose currencies fall against the dollar - case in point, China recently loaded up on more Korean Treasury Bonds, taking advantage of weakness in the Won.  They will do the same thing as the Yen continues to fall (they were largely responsible for pushing it up after the Senkaku Island incident).  And a strong dollar will allow them to buy more hard assets at a better price.

Fri, 12/10/2010 - 18:02 | 797168 KickIce
KickIce's picture

Time will tell.  But the dollar is still weak, even if it stronger relative to other currencies.  I could easily see where they could make a play to set themselves up as the reserve currency.


Fri, 12/10/2010 - 18:20 | 797217 bbtrader
bbtrader's picture

The dollar is definitely weak, yes, but it is not as weak now as one might want to rationalize - and this might explain the recent volatility in gold prices.  And speaking of gold, it is now a relative underperformer within the CRB Index, as is platinum.  Such recent weakness in well-loved hard assets should not be ignored.  If it's an issue of working off an overbought condition, fine, but even silver today acted a bit funny - not the normal strong push even though the dollar churned the last two days.  Perhaps once the Euro issues are mitigated, then the dollar will resume its very long-term move south.  But until then, expect China to take full advantage of its current strength in whatever way possible.

Fri, 12/10/2010 - 18:34 | 797252 KickIce
KickIce's picture

But why is gold weak, is it due to fundamentals or manipulation?  Take silver, it would have to be in the $70-75 range to be equivalent to 1980 prices.


Fri, 12/10/2010 - 19:36 | 797419 bbtrader
bbtrader's picture

My first guess is, way overbought and dealing with a stronger USD - but, there have been days when gold rallies with the USD rising, and gold drops with the USD falling - so it's become more of a safe haven play.  And the bond money seems to be going more into equities than gold, if you can believe that.  Not sure if gold is manipulated, but I do trade futures and I tend to agree with some trader I'd heard say that it's become a daytrading hub - you should see the selloffs when they start, very fast.  Crude oil of course is big with daytraders, so maybe now gold futures are starting to become like that.  I don't follow silver as much so I wouldn't know, but if you're long silver you must be loving it.  But silver does not always move with gold, nor does platinum.  Copper usually moves with crude oil but not today - it was strong whereas crude oil sold off.  So gold is just doing it's own thing and is mainly a safe haven - note how it acted as such in early May.

Sat, 12/11/2010 - 00:05 | 798057 UninterestedObserver
UninterestedObserver's picture

Sorry but that thesis is weak based on the fact that they can't all of a sudden sell a trillion dollars in bonds without destroying the dollar so it has to be done gradually. Case in point would be the huge jump in Gold imports to China announced today. They have been steadily dumping dollars and the only reason the effects have been muted is because the Fed is picking up the slack which in the end will cause them to be holding a very large bag.

Fri, 12/10/2010 - 17:12 | 796978 I Am The Unknow...
I Am The Unknown Comic's picture

This may be a "duh!" comment to a lot of you, but it appears to me that the VXX is getting shorted in order to help prop up the market.  Even when the VIX increases, the VXX still drops.  It is on a continual decline.  If manipulators are indeed shorting VXX, then this is a great play well into 2011, right?


Fri, 12/10/2010 - 17:14 | 796983 RobotTrader
RobotTrader's picture

New post:

How to survive trading stocks today...

Fri, 12/10/2010 - 17:29 | 797023 doolittlegeorge
doolittlegeorge's picture

when "trading stocks higher for profit is easy compared to trading debt" by definition "we have a problem."  so far i've been unhappy with the offerings.  perhaps a "flash crash" in the debt markets is needed? a "debt hero" perhaps.  needless to say this regime can't even fathom a "worthlessfinancial elite" actually paid for two World Wars fully KNOWING the sacrifice it would entail.  Now "we just have the debt of the World War."  OBVIOUSLY the war cannot be far behind.

Fri, 12/10/2010 - 17:18 | 797002 toathis
toathis's picture

Marc Faber, Dr. Doom, now changed his mind. No Great Depression 2.0, no Deflation, no Hyper-Inflation.

Nothing else is coming. US is coming back and coming back strong! 2011 is shaping up to be a great year for the republic!




Fri, 12/10/2010 - 19:05 | 797328 CrashisOptimistic
CrashisOptimistic's picture

Assuming you're serious, you do realize that no one has ever dealt with oil this high 2 out of three years.  In the end, oil can't be printed.  The liquidity pump underway . . . is underway . . . precisely why?

Fri, 12/10/2010 - 19:06 | 797331 CrashisOptimistic
CrashisOptimistic's picture

You do realize oil is now this high 2 of the last three years?  It's never done this before.  

In the end, no one can print oil.  You might want to ask yourself, assuming you're serious, just why the 600 billion dollar liquidity pump . . . was required.

Fri, 12/10/2010 - 17:34 | 797053 Mrmojorisin515
Mrmojorisin515's picture

What does Rosenberg see that John Williams doesn't? Anybody here read LEAP20/20?  They are saying austerity will be forced upon the US this spring?  Any comments?

Sat, 12/11/2010 - 00:07 | 798063 UninterestedObserver
UninterestedObserver's picture

Latest poll shows Americans want the deficit reduced AND keep all entitlements - we have a long way to go until the average American "wakes up"

Sat, 12/11/2010 - 00:09 | 798065 UninterestedObserver
UninterestedObserver's picture

Latest poll shows Americans want the deficit reduced AND keep all entitlements - we have a long way to go until the average American "wakes up"

Fri, 12/10/2010 - 17:36 | 797060 MiningJunkie
MiningJunkie's picture

Recurring Theme: Never underestimate the replacement power of equities within an inflationary spiral. Cash is trash. Short cash and long anything non-cash. Buy silver equities for the final mania phase . Recommended list available on demand.

Fri, 12/10/2010 - 20:32 | 797568 kubrick007
kubrick007's picture

i'd like the list of silver...lotta talk on zerohedge and i love it but more interested in specific plays...

Fri, 12/10/2010 - 17:48 | 797106 Gimp
Gimp's picture

Yipee ...Hope and will all be okay...yipee

Fri, 12/10/2010 - 19:07 | 797335 banksterhater
banksterhater's picture

utilities go down with higher rates, the MLPs/oil trusts are extremely overbought, grocery stores are risky with SVU probably cutting dividend, all are margin-squeezed, GAP going tits-up.

Fri, 12/10/2010 - 19:34 | 797406 mkkby
mkkby's picture

This feels a lot like the dot com market.  Up on any news.  The trouble for bears is it makes no LOGICAL sense, and always goes on much longer than you expect. You just have to hold your nose and buy.  Or at least I did when stops protected me.  But with flash crashes nobody has risk management any more.

Every gov has a printing press.  3% gdp?  Hell, why don't they print 4% next year, then 5?  Like the dot bomb and every other ponzi it will end badly.  Very badly.  "When" is the question.  I'll get back in when it pops.  Without trustworthy stops anything else is reckless.




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