Where We Are, And Where We're Headed (2011)

[traelin0]

It's that time again.

Time to look at the last year, and to prognosticate for the future. We'll start with the 2010 Predictions and score them.

•This is not a new bull market; the market will be lower on December 31st. Miss, but I think I get half-credit. Why? Because 1220 is about where we are now, and that's what I said we'd get somewhere during the year. Considering that virtually everyone was looking for 1350 and that wasn't achieved, I can't say it was a terrible call. Nonetheless, up is up, and I called down, so despite being nearly bang-on for an intermediate top at 1220, we're up from January 1st. Half-point.

•The long end of the curve will move higher. I didn't define what "long end" was, but most people consider the 10 year to be the "long end." It's lower than it was on January 1st. Miss, even though trending up now. Timing is part of the prediction though so trend or no trend, it's wrong. Zero.

•House prices will fall another 20%. Not yet. Miss. However, prices are lower (from the last quarter's report, which was issued on November 30th) from the year ago levels, so there has been no recovery. Nonetheless, again time is a factor, so I get zero points on this one.

•Banks will "give up" on holding real estate and will foreclosure inventories. Big hit. Foreclosure sales in fact got so frantic that banks were foreclosing without having the legal documents to do so, turning to "robosigning" and other alleged offenses. I should be able to get two points when a prediction hits so solidly that the people that were predicted to do something resort to what can be argued as rampant criminality to accomplish it, but I never set that as a condition. Nonetheless, that's a big hit.

•Credit will not ease for "ordinary people." Hit. No decrease of materiality in credit card rates, credit outstanding is decreasing, and ex-student loans all credit for consumers is down huge and continuing. In fact, revolving credit has been declining at a 10% annualized rate all year long.

•A massive second wave of small-business bankruptcies will sweep the nation. Not yet. Miss. Although if anything I'm seeing thus far is to be believed, it's happening - just not "massive" and "as reported." In certain areas (ie: The "Inland Empire" of California) the rate is up by almost 10% annualized but there are pockets of improvement too. No points.

•Unemployment will appear to be stabilizing but that will prove illusory. We finish 2010 over 10%. Damn close. It is definitely not improving. I'll take a half-point, and may have to revise it since December's report isn't in yet, and I might get the other half in a few days.

•The "revolting" call was early, but not wrong. Nope. Miss. Although there have been riots, no coups. Yet.

•The states will go the government well for handouts, they probably will get them, but it won't matter. Hit. Governor Christie (NJ) is the only one dealing with this honestly. Employment of government leaches, er, "staff" continues to decline and deficits and hiding of truth continue. California and Illinois are the worst two but not the only ones in trouble. This is a story for 2011 and there's a prediction related to it in this edition as to how this plays out. The market has figured it out too - look at things like IQI, the levered muni fund, NUV, or several others. They're trading below 1/2010 levels.

•A "double dip" will be recognized by the end of the year. Miss. But wrong likely on timing, not facts. The ISM Manufacturing spread between inventories and new orders is at impending recession levels. Looks like they kicked the can a bit better than I expected, but now it's full of cement. We'll see.

•China will lose control of their property and plant bubble. Miss. Coming as well, but not yet. Timing is everything.

•Canadian Real Estate will show signs of cracking. Yep. It hasn't blown up yet, but I didn't say "blow up", I said "signs of cracking", and it's there. There are even warnings coming from there at this point. Point.

•The Fed's games will "leak" and credibility will be shaken. Point. Forced release of their lending data, among others, Ron Paul's ascendancy and more. This has all the ingredients for fun in 2011 - let's see if we get it.

•The Dems lose big in the House. Big point. That was a rout and nobody can argue it.

•Congress continues to try to spend its way out of the recession and runs into rising rates. They did and Bennie causes the rising rates. Amazing, really. Half-point for what Congress tried and I took the full-point miss up above on the rate prediction.

•One or more of the PIIGS either defaults or is forced into austerity. Hit. Pick one. Greece and Ireland were forced literally, and the others are trying to preempt. That ain't over.

•Return of Capital will reassert itself. Nope. Miss.

More here:
www.market-ticker.org/akcs-www?post=176132