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.