HOUSING – Low and mid range SD homes in desirable areas with good schools will enjoy continued and steady appreciation. Entry level high end homes (defined as 800K to 1.3M) will fully stabilize by 3Q and remain flat. High end homes (above 1.5M) will continue to decline. The tsunami of foreclosures will not materialize. Fully indexed rates on resets and recasts will average 3.5% for the year.
JOBS – Unemployment rate for hourly workers will slightly worsen, while white collar jobs stabilize. Aggregate unemployment will increase negligibly hovering near 10%.
OIL – Demand will exceed worldwide capacity levels near 88M barrels/day. Price will fluctuate between $65 to $85 and trend towards $85 by end of year. TPTB will enforce this range to ensure continued recovery.
GOLD – Excellent electrical conductance and corrosion properties and ideal material for fine jewelry. Beyond that, it has no intrinsic value. Judging by the number of infomercials, we are well into the speculative phase. Look for the big crash once an inkling of confidence is established in the global monetary system. It’s just a matter of time with smart money leaving the flock as early as 2Q. You might as well buy Dutch tulips.
STOCK MARKET – The market will rebound to 9/2008 levels with the SP500 & DOW zigzagging ,but trending towards a peak of 1250 and 11300, respectively. Yes, it’s overvalued, but what does that have to do with anything.
INTEREST RATES – Federal funds rate will remain near zero for the year, perhaps increasing to .5% by year end as fiscal stimulus cascades into the economy. Regardless of M3 increase, inflation will remain non-existent. Still spooked, consumers and businesses will remain overly cautious applying excess money to pay down debt and cleanse balance sheets , and not slosh around in the economy.
DOLLAR – Will remain the preeminent reserve currency. Let’s review – oil is traded in dollars, dollar is decoupled from gold, we can print dollars to our hearts content, China and Japan own so much US treasuries they can’t divest without collapsing their investment and exports, and if push come to shove we have the baddest arm forces on earth. It’s a beautiful thing.
NEXT BUBBLE – I’ve been looking for the next emerging bubble to invest with a 5 year peak horizon for harvest. No clear winner so far. Clean energy, social networking enterprises, any suggestions ?
Our union continues to remain strong. Anytime we approach critical mass, the good people of this nation become engaged and quickly swing the pendulum back restoring order to the universe, as evidenced by the Massachusetts election result. So to all the Piggs living in underground bunkers, you can ease off on all the doomsday posts, come out and enjoy the sun.[/quote]
Instead of making my own predictions can I just jump on Cabal’s bandwagon? I agree with almost all of it, the only deviation and addition is that I think unemployment will tick down as the year progresses and interest rates will tick up toward the end of the year, these things will go hand in hand, nothing drastic, it will seem….boring. We will be in the meat of the “flat part.”
When the collective sigh of relief comes, be it 2011 or 2012 and the greatest economic contraction of our lifetime is over, we will be better for it. Most of the people who were adults during the great depression are no longer with us, they were better because of it and we will be better because of our lesson. When we are gone, this will happen again, is it too early for me to make my prediction of the great depression of 2060?
