THE Biggest Trends of 2011

• faithmight
• January 5th, 2011

“The only trend that matters in 2011 is the long term trend.”

That is my prediction for 2011. I traded into the new year. And now that it is 2011, I’m taking the week off. A very interesting week to be on sidelines but a nice vantage point to see in which direction trading in 2011 might kick off.

PREDICTION A: The consumer will disappear. The saver will reemerge. With the holiday season officially over, individuals will become savers again. Households still saddled with debt and fortunate to have income will service debt and save the rest of their money. As consumers in G7 economies slow spending, consumer goods exporting economies like China and Germany will continue to grow but perhaps at slower rates. Surplus countries like China will continue to diversify out of the USD with hard assets. This bodes well for commodities and the economies that export them.

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PREDICTION B: The GBP will continue its rally versus the USD but slump against EUR and AUD. The British economy will succumb to inflation, over exposure to bad European debt, savers in the economy rather than spenders or any combination of the three. The market has not given Britain its just attention in this respect as Europe, the US, and Asia continue to overwhelm the headlines. The MPC seems to have spent 2010 happy in this background and hunkering down for 2011. But the central bank will have to respond to the bleak economic aspects especially if the market catches wind in the form of widening yield spreads.

Despite the bleak fundamentals for sterling, America’s deficit spending will weigh on the greenback. Any currency backed by over $1 trillion in credit can’t be sustained in the long run without massive and painful deleveraging. The market will get this. And it is why the US will remain at war, where ever. Risk aversion is the only bailout that can keep the USD supported for now.

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PREDICTION C: Mobile will be the new long term trend in technology. Screens will get larger not smaller making tablets a hotter commodity than smartphones. Android will rule as Google makes more treaches into so called emerging markets.

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PREDICTION D: Apple has officially become a long term trend with its passing of Microsoft in market cap and projection as the first trillion dollar company. Facebook will be the first company to raise $1 billion in venture capital and win an Oscar for Best Picture.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: 2011, GBP, New Year, predictions

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