My forecast and commentary for 2011 is intended to plant seeds in an open mind. We are into the transformation of our society, culture, habits and balance of power, as well as climate. A very wise sage business man that I have known for many decades, has said to me "There are a lot of people who have much money, but there are many more people who do not". The problem with the U.S. is not that we have poor, but that the poor strive to stay poor. That is the infancy of a state of third world mentality. However, some of the 3rd world poor are striving to improve themselves through a diminishing concept in U.S.; work.
This brings me to my first projection for 2011. A concept will emerge worldwide over the next decade that is already birthed - Micro lending. The concept is not new, it is actually ancient but will now be fertilized because of the mindset of the world. Micro lending has a basic premise to its growing culture, make opportunity available to those hungry to receive it. The simple fact that a person is poor does not mean that is their fate forever. Micro lending is placing literally just dollars in the hands of women in third world poverty who will work and pay it back with interest on a timely basis. Novel idea? No, it helped the colonists get a third world nation in the 1700's to the world power in the 1900's. Understand the transformation.
My second projection is an obscure commodity that we are all aware. Does that sound like an oxymoron? That commodity is the fluid milk futures contract. I believe it will be a big winner for the future. My 2010 forecast talked about the agricultural commodities. That sector broke out to the upside in 2011 and has farther to go. Milk will follow as its demand will increase throughout the world especially as the world fights a calamity that is on our doorstep - famine.
The burgeoning population throughout the world requires more and more food. The U.S. has the natural resources, the rest of the world is limited. Yet, where does the stimulus money go? Well, we all know where it didn't go, to the production and fertilization of agriculture. In fact, over the past several decades, crop storage has diminished to the point we cannot feed our own people if just a one year interruption of food production occurs. Our omnipotent government's theme is to finance consumption and ignore production. Understand the transformation.
I sincerely hope that your open mind is now saying, "Wow, I had not thought about these specifics". I have always tried to look beneath the surface of why things are not what they appear. This leads to my next projection which is an awareness of the financial environment. More of the same with a lack of balance? Ponder this phrase as the introduction into my next projection.
My next projection is that the computer world will have a glitch that will shake Wall Street, Main Street, and Capitol Hill. I have seen the S&P futures evolve into an environment where the bobby pin is going to short circuit the main frame. They called it the fat thumb trade in May of last year. A momentary glitch that sent billions of dollars into cyber space away from peoples' account statements. Did we learn from that? No. The old adage fool me once, shame on you, fool me twice shame on me. This glitch in 2011 has to have a backdrop that allows a void to materialize. The 'void' creator is Benny B. and his academia buddies that I will refer to as the 'Rascals'.
The S&P was up almost 13% in 2010. Not euphoric or is it? The comparisons to the 10 year environment may make you think it is euphoric. The past 10 years has had a gain of between 7-8% total not annually. The month of December was up just shy of 7%. Wow, one month made as much as 10 years! How is that possible? The 'Rascals'! December 2010 was the biggest gain since 1991, 19 years ago! The 'Rascals'.
Here is my next forecast. The S&P futures will have at least a 22% correction from the highs to the lows this year equating to a movement of 250 to 300 actual points. More importantly, we will have volatility. My Daily CCT is reading at warning levels not seen in years. The stock market needs energy to hold and escalate from many sources not just the "Rascals". The market correction will need a catalyst to shock reality back into a Camelot minded investment world. Watch closely how this new Congress deals with the Fed. No longer is the Congress and the Fed bedfellows and bed gals! Some very key positions in Congress are now held by some very adversarial personalities to the 'Rascals' . The Fed has been an uncontrolled teen-ager on speed, it is time to be taken to the woodshed where Ron Paul has a big stick.
The next projection is rampant inflation that becomes a tsunami over the next 5 years. The 'Rascals' still stinging from derriere adjustments will actually raise interest rates in 2010. The 'Rascals' will be viewed much differently by everyone in 2010. Understand the transformation!
The 2011 strategy is to see the big picture as understanding the environment is paramount. Goldman Sachs will finally be shackled by regulation not conscience as their front running the Fed QE2 money will end. The bond market took it on the chin in 2010, the stock market will take it on the chin in 2011. Commodities will continue to emerge as favorites, stock and bonds as tools of the 'rascals' to be shunned.
The search and find of situations like micro lending and milk futures will be the 'lottery ticket winner' for the futures. Every society cycles and this cycle is transforming. Can you under the transformation? You must!
The barnyard in 2011 will stink less that the 'Rascals' do.