Outlook 2011: Climbing the Wall of Worry?

Leo Kolivakis's picture

me first wish all my readers a Happy New Year full of health &
happiness. It's that time of year where I reflect on what lies ahead.
Last year I wrote about Black Sloths and commented:

global pension crisis will not disappear overnight. It is a long-term
structural issue that will plague governments for years. In fact, part
of me thinks that the Fed and other central bankers will try to
engineer inflation to partly offset future pension liabilities.

worst fear is that they will fail miserably, creating another
generation of paupers. I hope I am wrong, but this remains my worst fear
for the next few years. I do hope monetary authorities and governments
take the pension crisis more seriously.

Governments around the world are taking a closer look at pensions,
especially public pensions, but I'm not convinced they're moving in the
right direction. I worry that instead of bolstering retirement systems
around the world, we are weakening them, leaving far too many people
exposed to the vagaries of "sophisticated" wolf markets. This virtually guarantees more pension poverty down the road.

for monetary policy, the Fed continued engaging in quantitative easing
(QE) in order to reflate risk assets and is engineering inflation,
including inflation in emerging markets.

still maintain that the financial oligarchs and power elite have vested
interests to keep the current financial system alive for as long as
possible. Their worst fear is to be trapped in a prolonged period of
debt deflation. That's why I still think the dips will be bought and that
liquidity flows will continue driving risk assets higher in 2011.

But every year is different. The easy money was made in 2009 following post-deleveraging blues.
Going forward, it will be much harder to make money off broad market
moves, and deleveraging hasn't gone away, but I also think the world
isn't half as bad as many bears scare us into believing.

you sell all your stocks or do anything extreme, take a step back and
read some predictions for 2011. Let's begin with Larry MacDonald who
reports in CTV, Reasons to be both bullish and bearish in 2011:

1931, The New York Times celebrated its 80th anniversary by asking
Henry Ford and other luminaries to forecast what the world would be
like in 2011, another 80 years ahead. As the archives on the newspaper’s
website reveal, Mr. Ford envisioned more success “in passing around
the real profit of life.”


He may prove to be right. Investment
strategists, most economists and investor sentiment surveys see higher
stock markets and economic growth in 2011. But there are voices of
dissent, or at least caution. Here are three reasons to be bullish for
2011 – and three reasons to be cautious.


Bullish: improving economic signals


U.S. economic indicators hint that the self-sustaining phase of the
business cycle may be close at hand. Retail sales have trended up since
July to a three-year high, while jobless claims have declined, leaving
the four-week average at its lowest point in nearly two and a half


The widely watched Weekly
Leading Index published by the Economic Cycle Research Institute (ECRI)
has risen to its best readings since May 28. Money supply and credit
aggregates are turning up as well, observes institutional advisory BCA
Research, suggesting banks are beginning to lend and firms to borrow.


Bearish: housing sector missing in action


the housing market leads U.S. economic recoveries. But stimulus so far
has been “inadequate to lift home construction and sales,” reports
Asha Bangalore, senior economist at the Northern Trust Company in


Adding to concerns, the S&P/Case-Shiller Home Price Index has started to go down in recent months and could fall further.
“There is still roughly two years of unsold inventory overhanging the
market once the ‘shadow’ foreclosure backlog is included,” Gluskin
Sheff chief economist David Rosenberg declares.


Bullish: supportive policy


by earlier fears of a double-dip recession, U.S. policy makers
recently announced new measures to boost the economy. Bush-era tax cuts
were maintained, the payroll tax temporarily cut by 2 per cent, and
unemployment benefits extended.


The Federal Reserve announced a
second round of quantitative easing, committing to the purchase of
$600-billion (U.S.) in U.S. government bonds by June. The Fed wants to
keep five- and 10-year Treasury yields down and encourage U.S. banks to
lend rather than park funds in Treasuries, economists say.


Bearish: bond risk


stimulus leads to growth quickening too much, the bond market could
sell off, causing yields to shoot up and undermine the economy.
flash point is currently 3.8 per cent for 10-year U.S. Treasury
yields, according to models developed by Peter Gibson, the CIBC World
Markets chief portfolio strategist who has earned top rankings in the
Brendan Wood International survey of analysts since 1994.


If yields breach this ceiling, the Fed will try to hammer them down with quantitative easing. If
that doesn’t work, the Fed could raise short-term rates to appease the
bond market with the prospect of economic slowdown, Mr. Gibson says.


Bullish: healthy corporations


corporations are “in phenomenal shape” writes Tony Boeckh in the Dec.
17 issue of the Boeckh Investment Letter. Profit margins, at 8.7 per
cent, are way above the long-term average. And cash balances are huge,
led by the technology sector with a cash-to-equity ratio that exceeds
25 per cent.


If the recovery picked up, “those cash holdings
could be used for M&A activity, capital investment, share buybacks
and, of course, higher dividend payouts,” Mr. Gibson writes. Exceptions
may be exporters who keep cash balances offshore.


Bearish: state and local cutbacks


shock is the sharp pending drag from widespread and accelerating
spending cutbacks and tax hikes at the fiscally strapped state and local
government level [in the U.S],” Mr. Rosenberg points out. “This
promises to be a major macro theme for 2011.”


Funding pressures
are going to be more intense when the “Build America Bond” program winds
up. “The sector has laid off 250,000 people in the past year and more
is to come as this crucial 13-per-cent chunk of the economy moves
further into downside mode,” he adds.

We continue on a bullish note which seems to be the consensus. Bob Doll, Chief Equity Strategist of BlackRock makes his 10 predictions for 2011:

1. US growth accelerates as US real GDP reaches a new all-time high.


2. The US economy creates two to three million jobs in 2011 as the unemployment rate falls to 9%.


US stocks experience a third year of double-digit percentage returns
for the first time in more than a decade as earnings reach a new
all-time high.


4. Stocks outperform bonds and cash.


5. The US stock market outperforms the MSCI World Index.


6. The United States, Germany and Brazil outperform Japan, Spain and China.


7. Commodities and emerging market currencies outperform the US dollar, the euro and the Japanese yen.


Strong balance sheets and free cash flow lead to significant increases
in dividends, share buybacks, mergers and acquisitions and business


9. Investor capital flows move from bond funds to equity funds.


The 2012 Presidential campaign sees a plethora of Republican
candidates while President Obama continues to move to the political

I tend to agree with most of these
predictions, especially the ones I put in bold. One of the key things to
watch for is how capital flows out of bond funds into equity funds.
While stocks are likely to outperform bonds, I'm not bearish on bonds. I
don't see inflation in the US and backups in long bond yields present
opportunities for investors to pounce.

Importantly, the Fed will
do whatever it takes to make sure bond yields do not wreak havoc on the
financial system. The problem is that some feel we didn't need QE2 and
there is way too much stimulus in the pipeline. Maybe the bond market is
worried that another round of QE will propel yields higher. One
portfolio manager told me: "we don't need more QE; it's going to
backfire big time!". The same portfolio manager sees the curve
flattening in 2011 as short rates rise in anticipation of Fed rate hikes
in 2012.

And what about Doll's prediction that the US market
will outperform all other markets? It might very well be the case, but
Bernard Lapointe wrote an interesting comment in the Sceptical Market
Observer claiming that 2011 may be the year for Japanese stocks. Who knows? I see liquidity flows continuing to drive US stocks higher.

far as commodities, the biggest risk I see going forward is the price
of oil overshooting $100/barrel. Forget the "imminent collapse of the euro
zone" (won't happen) and pay attention to oil because the biggest risk
to the recovery is the price of energy.
I remain bullish on energy and alternative energy where I see a
long-term secular bull market developing (and potential bubble). Higher
energy prices will be positive for the Canadian stock market.

listen to Barton Biggs, Traxis Partners and Jeffrey Gerson, Gerson
Guarino & Meisel Group founding partner provide their predictions
and outlook for 2011. Gerson says the housing double dip is likely to
worsen in 2011 and will pressure the economy. Gerson is approaching
the markets in a cautious and tactical manner because he believes the
market is unlikely to regain the highs as soon as many might think.

Biggs, however, is extremely bullish. Although he believes the market
is overbought he says the market can continue to rally higher in the
early portion of 2011. I agree with Biggs, especially on emerging
markets, which is why I believe markets will climb the wall of worry.

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Clapham Junction's picture

Can't anybody see that the overwhelming bullishness towards gold/silver is getting ridiculous?

Also, I'm as paranoid as the next guy-be cautious in posting how much gold/silver you own or if you own any at all.

I'll say this- your positions should have been completed when gold was under $500 and silver under $10.

In that respect, you will be fine and will never feel like you have to sell.  Be ready to buy again when we reach those levels again.

I know.......it will never happen, the world is flat, and the Nasdaq will never fall below 4500.  Oil will never hit $40 again, and the T-bond yields will never hit 3.00% again.

(deleted, too insulting.)

I'll add this-all the screwing around by the FED, all the BS, is business as usual in the good old USA.  Believe it or not, my biggest contrarian supposition is that everything is as normal as ever. Not good mind you, but normal.


akak's picture

Can't anybody see that the overwhelming bullishness towards gold/silver is getting ridiculous?

Can't anybody see that the overwhelming bullishness towards exponentially growing and wildly unsustainable government debt (which is the ONLY thing "backing up" our faith-based, and doomed, fiat currencies) is getting ridiculous?

sgorem's picture

Sorry, must junk myself on one of my replies. Website should be-www.usdebtclock.org.

sgorem's picture

but i was shouting:) it's as though that is the only way to get a point across anymore..........................thanks for not junking me............may it rain silver and gold on you.

SheHunter's picture

Bob Doll is a cheerleader.  He magically appears on MSM at the end of a day when the market has tanked to expound on the underlying health of the economy and how we must be buying dips.  I appreciate the time you took with this article Leo but leave rah-rah Doll sidelined.

Armchair Bear's picture

With 25-30% unemployment, housing plummeting, commercial real estate ready to implode...we're screwed.

I can't see anything that can be done but to put tariffs on imported goods to make manufacturing recover here that can do much good...

Doubtful we'll see much of that.

If any.  Happy New Year everybody...

I'm planning a greenhouse.  Ice age coming...



sgorem's picture


akak's picture

There is a key on the left side of your keyboard labeled "Caps Lock".  Hitting it again (usually, with a little red light on the upper-right side of your keyboard going off) will allow you to type and post WITHOUT SHOUTING OUR METAPHORICAL EARS OFF DAMMIT!!!

cranky-old-geezer's picture

Hmmm.... where to begin pointing out all the holes in Leo's analysis.

Here, let's just focus on the two biggest holes:  (a) massive unchecked criminality at the top, and (b) debasing dollar.

Any prognosticator can pick a few seeminly healthy looking leaves or twigs here and there and build a bullish scenario on them, while neglecting to mention the entire tree is diseased and dying.

BigDuke6's picture

If Leo says 'its safe to surf this rally then its safe to surf this rally, young captain!'


i too am up to my neck in gold, of course there is talk of a pull back and if i could do charts i'd show you one from a subscription website which shows the consensus of brokers showing anywhere from a small rise to 20% correction.

i think you cant go past the institutional, chinese and indian buying of the dips so for me i'm sticking to being long gold.

AEP said the middle ages (1600-1700's) price of gold was about $2500 to $3000 today equivalent.

i see that as being very useful to pick a top should it bubble.

allowing a bit more for that chinese frenzy and i reckon a bubble top would be $3000 to $4000.


nmewn's picture

"I worry that instead of bolstering retirement systems around the world, we are weakening them, leaving far too many people exposed to the vagaries of "sophisticated" wolf markets. This virtually guarantees more pension poverty down the road."

Plea for civility noted.

I assume because they are moving toward a more 401k style retirement program? I don't know why that would necessarily be.

It's my understanding they are prey now (see Rattner's, the Car Czar, recent multi-million dollar fine for kickbacks).

Can they control their investment direction now? That is, how their retirement funds are invested.

I genuinely don't know (I don't work in the public sector)...it's a question.

Bendromeda Strain's picture

If it's Federal, you can choose to have your retirement funds "comingled" w/ BlackRock. Yay!


nmewn's picture

Thanks Ben...nice digging ;-)

So here we find;

"The G Fund assets are managed internally by the Federal Retirement Thrift Investment Board. The G Fund buys anonmarketable U.S. Treasury security that is guaranteed by the U.S. Government. This means that the G Fund will not lose money."

"The C Fund's objective is to match the performance of the S&P 500. The F, C, S, and I Funds remain invested in the BlackRock funds regardless of the performance of the securities markets or the overall economy."


"Although the BlackRock funds operate in a manner similar to mutual funds, they are not, in fact, mutual funds and are not open to individual investors. Furthermore, they are trust funds that are regulated by the >>>Comptroller of the Currency,<<<...>>>not by the Securities and Exchange Commission,<<< and therefore do not have ticker symbols." And finally...

"The L Funds are invested in the five individual TSP funds based on professionally determined asset allocations."...basically another trust fund.

So, what this appears to me is, the federal employee bears no market risk at all. There is no suffering alongside the common man by their own actions or lack thereof. 


They are perfectly happy to sit back & support whatever action the government takes knowing no matter what befalls the taxpayer (as it stands now)...they are covered...in fiat terms...a ponzi within a ponzi...why am I not shocked...LOL.


The above has been up all night...if no one is able to refute my conclusion, I submit we move forward with dismantling this ponzi as well. All Blackrock is doing is collecting fees for moving "money" around that's not really there...where are all my progressive friends railing about trust fund babies? ;-)

Edited again...approaching 24hrs.


Shameful's picture

I don't doubt that many things will improve in notational currency terms. With the worldwide effort to debase I would expect cash to be a terrible asset to hold. Personally I like gold/silver and then energy/commodities but I think that with enough debasing everything will move in notational terms.

But lets look at a possible horror show. Lets imagine what the response is if silver has another year like 2010. When silver is making all new highs it might spook the herd, ala Hunt Bros episode. Hell maybe it will even get some comment from the state media organs. Spooking the herd is dangerous though, can lead to my fear, the crack up boom. What will be even more painful is in the early phases of the crack up boom it will be heralded as a recover and a return of the consumer.

geno-econ's picture

Happy New Year Leo

Interesting how ZH readers follow and track financial entertainers. I can confirm from my tracking Bove his prognostications are pure bovine trash especially regarding Citibank 

More to the point about 2011 potential bubbles bursting, the latest talk  is the Canadian real estate asset meltdown. What is your perspective from up North?

AUD's picture

Yes, Mish likes to talk down Canadian real estate but have you seen the Canadian Treasury market? Booming. At present I'd say there's nothing in Canada the Canadian government can't backstop.

AUD's picture

Higher energy prices will be positive for the Canadian stock market.

Despite near record prices for commodities such as copper, nickel & even gold, there are junior miners on the ASX trading for pennies. Ok, based on their performance they may be penny stocks but this just tells me there's no bubble, in fact they are fairly priced (when assuming the dollar is a standard of measure). They are having enormous trouble raising 'equity', unlike the government, yet there are people here still shilling for government debt.

Why don't all you 'the stock markets about to crash' people go read Mish or something.

Freddie's picture

I foolishly resubscribed to Barrons because it was cheap $52 a year.  They have trouble delivering it and it is about 20 pages now.  They had the Top 10 stocks for 2011 today.  One of them was GM.  What a joke.

akak's picture

I foolishly resubscribed to Barrons because it was cheap $52 a year.

One gets what one pays for.

Or in this case, obviously less.

snowball777's picture

I'm afraid you've got the manual upside down:

One pays for what one gets.

Boilermaker's picture

Let me guess, Biggs has a shit-load of long positions he'd just love to unload.

Mr Lennon Hendrix's picture

For you he deals on the secondary market, which is the market equivalent of being a used car salesman.  Would you buy the cars he is offering at these prices?  How about going on a new lot of ferraris and cadillacs, get your gold and silver. 

When I drove off the lot, that's stuntin'

Get monie!

Boilermaker's picture

Golly Leo, basing an opinion on a tired cliche' of "climb a wall of worry".  For Christ's sake, get it a rest already.  The entire basis of any moves upward or downward are based on what the FED does.  Can you please check-in to Hotel Reality at some point?

NoQuitInMe1's picture

Wall Street will sell ANYTHING to their Main Street clients, regardless of it's suitability, as long as those Main Street clients will buy the "pitch". The supposed "best in the business" are saying that the markets are in good shape, earnings are strong, a recovery is under way. Lord help me if I were ever to listen to any of these geniuses. Here is a sample of their expertise from 2007 just prior to the market implosion.
Guess what Abby Joseph Cohen was saying in October 2007:

Now,on the back of a resurgent Wall Street, the top investment strategist at
Goldman Sachs, Abby Joseph Cohen, says it is “most likely” the world’s largest
economy will avoid recession. She sees signs that, after a grim August in which
overseas investors slashed their holdings of US securities by a net
dollars-69.3bn, more than three times the previous record high, overseas
portfolio managers are moving more cash into US assets again.

How about Bob Doll from BlackRock:

"10 Predictions" for 2007: BlackRock's Bob Doll Sees Another Good Year for Equities, with Expanding    Valuations Fueling the Next Phase of the Bull Market.

And here’s Barton Biggs:

Feb. 11, 2007 (Bloomberg) -- Barton Biggs,

co-founder of hedge fund Traxis Partners LLC, said he's ``gradually increasing''
his holdings of U.S. equities because he doesn't expect a recession and shares
are ``very, very 
cheap.'' Biggs, the former global investment strategist for Morgan Stanley, said in a Bloomberg Television interview that the market is ``at or very close to an important bottom'' and may be led higher by banks and brokerages when a rally occurs. Some financial companies may advance 20 percent to 25 percent over periods of two to three weeks, said Biggs, who helps manage $1.5 billion in Greenwich, Connecticut. March 16, 2007 Biggs Talks….watch the Bloomberg video here.   Once again…”the market was bottoming…and the subprime problem is “just another bubble bursting” and he doesn’t think we will have a recession and he doesn’t expect a decline in nominal house prices and he is bullish and he expected the S&P to increase 15% in 2007.

How about Dick Bove, rated one of the best banking analyst by Zacks in
2005, 2006, 2007, and a current constant blowhard on CNBC. This is from an interview he gave on Reuters in December of

BOVE: OK, well I
think taking the last point first, the Citigroup announcement is very negative
because those people who believe that Citigroup is going to cut its dividend, and I'm not in that camp, but those people who believe that that will happen
will see this as another reason to argue very strongly that the stock -- that
the company will have to cut the dividend because basically this increases the
size of assets. And it increases the size of assets with bad products. And
therefore presumably Citigroup will need more equity and therefore the dividend
needs to be cut. In the case of Bank of America, they just frightened the heck
out of everybody because they said that there will be a lot of big loan losses
near term, but we're also going to have loan losses next year and beyond. But
despite, again, these negative pieces of information which are coming out, I
think the banking industry will benefit from the problems that the brokerage
industry is having. In other words, people who cannot any longer borrow money
through the brokerage system will go back to the banks. So I think the banks
will show good increases in earnings. I think their dividends will actually go
up next year. And Bank of America actually yields 6 percent. That's a very
attractive yield.

GHARIB: So what is
your view on these financial stocks? Is it time to start buying them?

BOVE: I think so. There's
the old cliche about don't catch a falling knife. But in this case, I do want
to catch it. And I want to catch it if it is a bank which is yielding 6 percent
or in the case of Citigroup, 7 percent or in the case of many of these small
regional banks like BB&T and PNC and Wells Fargo and Regions Financial,
these dividends are just too compelling to give up. And in 2008 the earnings of
these companies in the second half should be moving ahead relatively strongl

And James Oberwies:


growth train is leaving the station, and if you wait until the cycle change is
completely obvious, you’ll miss the boa

How about  Donald Rowe:


Stay fully invested! …expect 2007 to produce unusual profits in both the U.S. stock
market as well as overseas… We are in the midst of a multi-year run-up in stock
prices. I don’t see any serious problems that could derail this marke

I could provide you with dozens and dozens of so called market professionals and “pundits” that have
been advising their clients to buy, buy, buy all during the last 10 years of
this secular bear market, and were clueless as to what was about to happen in
2007, this is just a sampling of some of the most well known. Most of these
“gurus” are all saying to buy again now, even though the markets, banking
system, and global economy are WORSE now than right before the implosion
in ’07 and ‘08/’09.

Warren Buffet, in my opinion, is just as bad as the rest of them, but in 2007, before the collapse occurred, he had this little pearl:

2007: “…people who expect
to earn 10% annually from equities during this century – envisioning that 2% of
that will come from dividends and 8% from price appreciation – are implicitly
forecasting a level of about 24,000,000 on the Dow by 2100. If your adviser
talks to you about double-digit returns from equities, explain this math to him
– not that it will faze him. Many helpers are apparently direct descendants of
the queen in Alice in Wonderland, who said: “Why, sometimes I’ve believed as
many as six impossible things before breakfast.

Stocks are lying, bonds are toast, currencies are fiat. If you
are not actively "trading stocks, then you should be avoiding them as rallies
should only be rented and not owned. When this bear market finally ends it will
be obvious. It will be a decline the likes of which the modern investor has
never seen. Perhaps the worst in the history of the market. The buying
opportunity at that point will be the greatest entry an investor could ever
dream of.

Ned Zeppelin's picture

Thanks for laying out some irrefutable arguments for what I know to be true: these sell-siders are merely idiots, and selling. There's no truth in there, it's all puffery.  Stocks are up because of the Fed, not for any fundamental reasons, so they will drop at some point once the Fed even whispers the free money party is over.  However, as a practical matter, with our politicians firmly bought and paid for, I don't see any particular reason the free money train stops anytime soon. So rent the rally if you wish, but keep your eye on the exit. It will come when you least expect it, and in a hurry. 2011? Maybe Europe is the catalyst, but I see them morphing into a stronger, German controlled federal union that relicates Bernanke's printing machine for the Euro. 

samseau's picture

Hilarious.  You just destroyed Leo's cred. +1

thepigman's picture

+100  All these assclowns have NEVER had

any advice other than BUY and never


Sean7k's picture

The fact that gold is up 29% and Silver is off the charts should tell you something: The stock market LOST money this year. How? By debasing the dollar, the FED has destroyed any "profit" the market might have made. The Bernank has created a fantasy investment land without a way to measure reality.

It doesn't matter what percentage stocks climb, if the currency has no value.

Freddie's picture

America is becoming Zimbabwe 2 and Obama has always been Mugabe 2.

ebworthen's picture


Happy New Year.

No doubt the fantasy may continue in 2011.

The tragedy is that it has been done on the backs of the average family and future generations.

The Bull/Bear discussion could be civil and academic if criminals hadn't debased the entire foundation of a civil society - the rule of law.

I can't celebrate any returns or anything in the markets when I know that my children were sold out for current bailouts and bonuses and that Evil has triumphed in this crisis.

max2205's picture

Let's put it this way. Shit will happen when you least expect it. And good things!

TheGreatPonzi's picture

Leo, let's admit there's a recovery. No problem. I'm not a permabear, I'm all in for a recovery.

So, if we're in a recovery, the due diligence would be to raise the <0.25% central bank rate, stop bailouts, and stop exceptional facilities progressively. Otherwise, there will be a reactivation of the sleeping monetary base, and hyperinflation would follow. Let's do this!

As long as the FED and the US government refuse to do this, I'll never believe in the 'recovery'.

It will be funny to see what happens at the slightest sign Bernanke stops his free money policy.

akak's picture

Leo, let's admit there's a recovery.

Didn't you actually mean, let's assume there's a recovery?

You know, as a theoretical exercise?

Because it is clearly only in theory that any supposed "economic recovery" exists in the US today.  Unless one lives in CNBC-land, where all the unicorns romp playfully with the bulls and everyone worships at the Church of Bernanke.

TruthInSunshine's picture

Leo, let's admit there's a recovery.

Didn't you actually mean, let's assume there's a recovery?


I had the same thought as you.


TruthInSunshine's picture

I forgot to add that if any 'Bull' is willing to put Bob Doll's record up for all to see here, that'd be fantastic, too.

I would honestly do it, but I don't have a ready made method of sourcing it and doing the extrapolation,  but I will go on a limb and hazard a guess (something I do not like doing) that it must be absolutely atrocious.

Fundamentals always catch of with inefficiencies and irrationalities, whether we're talking tulips, dot.coms or real estate. The only question that is relevant is how long it will take (which in modern times is a derivative of how long central banks can seemingly kick the can and seemingly defy laws of markets/physics/math & steal from increasingly insolvent taxpayers), and this is what spawned the timeless quip that "[t]he market can remain irrational longer than [one] can remain solvent."

akak's picture

... because the biggest risk to the recovery is the price of energy.

Until the massive crimes of our corrupt and sociopathic financial elites are finally exposed to the full AND dealt with, and until the woefully fraudulent and unsustainable Ponzi-nature of our monetary, financial and pension systems is overturned and reformed, I see no hope for any so-called "recovery".

The patient (strapped against his will) in his hospital bed does not begin to recover until the doctor stops bleeding him, not to mention ceasing to pump him full of poison.

??'s picture

Robert Doll and Barton Biggs

Other than Erin Burnette, I cannot think of two finer individuals to look to for a view of the future.

Thanatos's picture

Biggs is an idiot.

In his 2008 Book he was telling people to buy farmland, dogs and guns... Now he is bullish on the Markets.

Today, Paul Farrell quoted Barton Biggs as predicting the breakdown of civilization and anarchy:

In his 2008 bestseller "Wealth, War and Wisdom" former Morgan Stanley research guru Barton Biggs warns us to prepare for a "breakdown of civilization ... Your safe haven must be self-sufficient and capable of growing some kind of food ... It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc ... A few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage." Biggs sounds like an anarchist militiaman.

I haven't read Wealth, War and Wisdom, and I wanted to find out what Biggs is actually forecasting for the U.S.

I found an interview in which Biggs gives specifics:

Is what’s happening now in Dubai and Greece, for example, a canary in the coal mine? In Greece, there is real chaos and anarchy, with mobs on the street. If Dubai goes down the drain, there’s going to be serious trouble, because they have a million or so imported workers from third-world countries. They are working their butts off, and they have been cheated for years, in terms of what they are paid and their food allowances. There are going to be real problems there.

You can make the case that it is not inconceivable that the barbarians could be at the gate in Europe, Japan and the US. It’s one chance in ten that’s going to happen but, as a person with wealth, you must ask what type of insurance to take out against that ...

Either his timing is immaculate or he is an Idiot. After watching this interview I believe he is the latter.

DavidC's picture

Sorry Leo, whilst I agree with some of your points, despite Barton Biggs's experience he talks some real crap. He was interviewed a month or so ago on TV (unfortunately I can't find the clip) and, frankly it was embarrassing.

He makes quotes like the 2000s being " (the) Worst stock market decade in history" - what about 1930 to 1940? What about 1970 to 1980? Also, there is nothing magical about years ending in zero, there may be a psychology behind them but nothing more.

He seems to pin US stock market growth on emerging markets. Look what happened to Japan in the last 20 years when, for a large part of that there was a global bull market elsewhere! Just because the BRICs (for example) MAY continue to have growth there is NO reason to suppose the US will continue to grow as well.

My feeling is we've had a 50 to 60 year bull market and we're now into a bear market. If the Dow and S&P are up another 20% next year you can say 'I told you so'.


TruthInSunshine's picture

We are now sitting at 2000 levels on equity indexes - in nominal terms.

I am not sure of what a new high would be on the indexes, in real terms, but I'd venture that it would have to be at least +15% over and above the 2007 highs, before the bulls can credibly state we're in bull territory.

I think the bulls are waxing poetically on what's really a just a rally in a secular bear market, and they get an additional kick in the nuts when one takes into account what alternative asset classes are returning vs equities.

And of course, this rally has come at a massive price tag and has been incredibly inefficient given the massive hand of the Federal Reserve, other central banks, and the U.S. Government in sponsoring it, arguably at the cost of kicking true economic recovery and increasing real purchasing power down the road for quite a long time - while creating the conditions for price/asset distortions/bubbles and highly unstable economic conditions (as well as massive theft from taxpayers and wealth transfers to the financial sector, which is still fundamentally weak, after everything that has been done for them).

Of course, I will acknowledge that there are a select few who can trade these manipulated markets and make consistent and healthy profits - although I'd bet good money on the fact that these same people are also accessing or fed inside information, through a variety of methods.


TruthInSunshine's picture

I will make one short, statement-

Barton Biggs is an idiot of extraordinary lack of intelligence, even by relative idiot standards, or he is a total and complete con man, like so many other 'fund' managers, and I offer Exhibit A:



90%+ of Wall Streeters are literal criminals, IMO. If it weren't for the rock solid backstop of Amerikan Government, they'd all have to find another criminal racket to make a living within.

SamuelMaverick's picture

Exactly spot on.  Thank you for articulating that so well.  Leo means well, but is for the most part wrong.  

docsdoc's picture

Biggs is a genteel criminal sociopath

JW n FL's picture

He is miss-under-stood... he's special... his Momma told him so!

MrBoompi's picture

What good is a list like this without a recommendation to buy silver or gold?  It pushes stocks so much I wouldn't be surprised if it all ends up being totally wrong.

topcallingtroll's picture

I guess it is true that the seeds of change ultimately carry the destructive potential to eventually destroy itself and swing things back in another direction.  Our people are becoming more gun friendly, more anti government, and more anti-parasite.  Real hope and change!