The Weekend Economist "Quaerere Verum"

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Wednesday, December 29, 2010

2011 annus horribilis?

2011 annus horribilis?

1. European debt saga continues?
Bailout-Bingo will continue in Europe with Italy, France, and Belgium prime candidates for review.

2. Apple loses it's cool?
Being the biggest player on the block is going to cost them. Investigations, power abuse, shady subcontractors, patent disputes, lawsuits. Nonetheless the earnings powerhouse is sure to continue.

3. China Bubble?
State control and currency manipulation are undermining stability. With millions of smart youngsters unemployed, food prices sky-rocketing and cheap manufacturing spilling over the border, can China keep its cool?

4. U.S Recovery?
Politically and economically America will remain a lame duck. Although corporate profits are promising it has not yet translated in jobs and housing. Joe the plumber, ain't got no cash. If they don't fix the budget, they aint got no credit.

5. Commodity Value
The only commodity becoming worth-less is paper money. The rest is up.
Gold will continue it's upward climb as people try to hedge devaluation.
Oil has been cheap, but so is the dollar, so time for oil and other dollar indexed commodities to go up. BRIC currencies will continue to show strength.

6. Taking the R out of BRIC
Russia will continue to struggle to re-engineer its commodity driven industry. Not enough wealth trickling down and a stagnant population. If it can trickle down the wealth and dramatically improve rule of law and gaping infrastructure then there is promise.

7. Sony's last trick pony
Now that Sony's PS3 gaming and media platform is finally earning money perhaps it can turn around other parts of the business or launch a new one. Divestment or (hostile) take over will be on the minds of the executive board.

8. Real Estate

With bank balance sheets under pressure due to new regulation, lending growth to sectors such as real estate will not pickup in the developed world. This will translate into higher borrowing costs, bankruptcies and restructuring going forward. Deleveraging in banks will translate to deleveraging of both households and business. More equity, more risk, lower asset values.

More on real estate in 2011 friends,

All the best and Quaerere Verum

The Weekend Economist




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