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Summary Of Key 2011 Head And Tail Winds
Reader runedge submits the following useful summary of the key current head and tail winds as we enter 2011.
So as we venture into the new year, full of optimism at our rejuvenated recovery, let's pen a few issues facing the global economy, not that it has anything to do with equity prices. In more sane or shall I said, less Fed funded world, any of the issues below on their own would be enough to cause at least a minor correction in equity prices. So rather than presenting a story only bears would wish to read, I include a generous spin in parentheses so we can all enjoy, regardless of your position. After all as 2010 has shown us portfolios are not based on risk but rather spin tolerance.
1 - EU Sovereign debt (yes we know, it's contained, rising Spanish yields signal an improving economy as in the US)
2 - China's tightening to combat inflation (higher rates certainly won't cause the second largest GDP to grow slower).
3 - Municipal debt (but public sector layoffs in the NFP report don't really count so no worries here)
4 - US Treasury yields rising (the economy is clearly improving. Little fact, we turn our entire national debt every 4 years by the way)
5 - Housing double dip (housing is so weak it can't get any weaker)
6 - Robo signings / Mortgage Fraud (banks will ink a few deals with the SEC, next)
7 - Republicans will hold back stimulus (no stimulus means the economy must be self sustaining)
8 - Rising mortgage rates (as "Bulltard" excuse me Bullard says, rising rates mean the economy is healthy)
9 - Earnings warnings (that's right from Nike to Talbots to Cisco but wait they're isolated cases, ignore them).
10 - Margins being squeezed (but the CPI shows zero inflation)
11 - New Irish government (Ireland's GDP is small, no contagion or counter party risk here. Plus they don't have the cajones to tell the IMF to screw)
12 - Insider selling versus buying (insiders can't time markets, next)
13 - Retail pulling out of equity markets (their dumb money, surely they don't use that money to pay bills)
14 - 99'ers falling off the nipple (studies have shown people without benefits will actually start looking for jobs, and we all know there are plenty of jobs out there)
15 - 2012 political posturing (the Republican's won't throw the unions and CA and IL et al under the bus to win the white house in 2012, no not them)
16 - Declining property taxes base (but taxes to the existing base will just rise to offset)
17 - Pensions (who cares, they've been unfunded for years. It was only a small town in Alabama that stopped sending checks anyways)
So there you have it. Not a wall of worry, more like a really nasty defense that gives up about 50 yards rushing per game.
Happy New Year to all.
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18 - "Dude, where's my bunker?" -Ashton Kutcher
hilarious
I'll point out that spin tolerance is a measure of perception risk. Call it a "new normal" if you like. ;)
State budget destruction is vastly underrated in impact.
If local police forces are defunded, who thinks businesses can continue? Who stops the looters?
"Who stops the looters?"
You do.
http://www.kang.org/LARiot3.html
Crud, don't have a pic of the "U Loot, We Shoot" on the building here after Hurricane Charley.
Go figure, no looting.
Yeah...I remember that hurricane pic...fair warning...LOL.
I'm old enough to remember the last major riots in LA too...I distinctly remember a pic of a store in Korea Town...it was a wide angle pic aerial pic that showed one guy standing on each corner of the property with a shotgun (urban setting, the shop on either side of the store being protected had been looted and some windows broken on the protected store)...the picture showed a steady stream of people/looters coming down the sidewalk...crossing the street just before the store being protected...then back across after passing it.
The two Korean guys weren't really alone on the sidewalk...the aerial shot showed three more on the roof of the store armed with AK's ;-)
I did a quick search and could'nt find the pic...maybe someone else has better luck.
Found this though;
http://www.newsnet14.com/2010/07/29/la-riots-looters-and-korean-business-owners-defending-their-stores/
We remember that. Dem Koreans were prosecuted later. God bless the morons in CA, cuz no one else will.
Wow...I didn't know that.
Around here they'd throw a parade for em...in fact...well...never mind ;-)
Heck, we'll buy them the sheets for their hoods.
"Heck, we'll buy them the sheets for their hoods."
What the hell are you talking about snowy?
Spit it out or swallow...your choice ;-)
Chomp.
Owwwch!...didn't see that one comin ;-)
Bushmaster does. Or Colt, or S&W............
A defunded police force in a small city or town will be available to hire for a person of means. If timed right, nobody will notice the difference and, depending on the situation of the town, people might even welcome a king pin over an incompetent town council.
What about a brewing currency crisis? Geoploitical meltdown? Inflation morphing to Hyper-inflation? Supply chain breakdown? Social unrest? Dogs and cats living together, mass hysteria!!
Beer is now a currency? Who woulda thunk.
In a lot of ways, it makes more sense. I'll drink to that!
http://www.youtube.com/watch?v=mpOoJVzdgog&feature=player_embedded
Xtranormal video
Pimp Bernanke and the Psychopathic Super-Whores of CNBCUltimate headwind....the politicians who caused, enabled, and enhanced this mess are still in power. Politicians are like prostitutes but worse... they sell themselves (votes) and the consequences of the transaction last a lot longer than the money they recieved.
It's the "new normal"... all these signs are bullish and mean a healthy economy. Don't you know? 2 + 2 = 5 brother. Buy, buy, buy!
Whatever happened to the teenie weenie problem of CRE? I thought it was set to hit the fan about now. I rarely hear anyone talk about it.
http://www.costar.com/News/Article/Deteriorating-CRE-Conditions-Forcing-...
http://www.globest.com/news/1818_1818/washington/305632-1.html
http://www.reuters.com/article/idUSN2316171520101223
The hope is that as the municipalities start to fail and police layoffs increase just as crime increases, people will have to band together for protection. As an optimist, I believe that there are good people who will become 'their brothers' keepers' and watch out for each other. Maybe not formal neighborhood patrols -cause God forbid we carry weapons in public :( - but much more of a busybody culture where being a nosy neighbor is met with gratitude. Criminals will learn what areas to avoid.... Although I would prefer he have an assault rifle, my next door neighbor is a crack shot with his crossbow - silent and deadly...
How very communal.
Does this mean you'll patrol the bank executive and lawyer neighborhoods to prevent vandalism?
Those will become staging and practice areas, or as it's known: NRA Theme Parks.
Housing is weaker than Clay Aitken.
And the beat goes on... Gentlemen and ladies I am afraid that we will have to tack into the wind in order to steer our families and loved ones into the future. (please pardon me for the over-used metaphor - I am a true landlubber)