January 2011 - Forecasts & Trends

Forecasts & Trends is much more than just investment blog posts. You need to know the "big picture;" you need to have a "world view," especially in the post-911 world; and you need more information than ever before to be successful in meeting your financial goals. Gary intends to help you do just that.

Forecasts & Trends

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    • Forecasts for 2011 Continue to Improve, But...

      This week we look at two new economic forecasts for the US in 2011.  The Wall Street Journal recently released its annual survey of more than 50 leading economists and forecasters, and I will summarize the findings for you.  Also, we'll look at the latest findings from the Blue Chip Economic Indicators which surveys 50 well-known economists.  In both surveys, the majority of analysts believes the US economy will grow by more than 3% this year (3.3% per the WSJ and 3.1% per BCEI).

      Surprisingly, to me at least, both surveys suggest that inflation will remain below 2% for all of 2011.  Given the explosion in food and energy prices, that sounds low to me.  Also, the results of both surveys are based on the assumption that there will be no new negative surprises or "Black Swans" in 2011.  I certainly would not make that assumption, especially with home foreclosures hitting new highs and the unemployment rate expected to remain above 9% for most of the year.

      While the latest survey averages suggest GDP growth will be over 3% this year, there were plenty of forecasters cited that believe the economy will grow by less than that rate in 2011.  I will analyze the reasons why the economy may fall short of 3% growth this year.  And finally, we take a look at some possible Black Swan events that could arise this year.  It should all make for an interesting E-Letter.

    • Stratfor’s Annual Global Forecast for 2011

      Since January is the month for forecasts, today I present you with Stratfor’s global forecast for the New Year which was just released last week. Due to the length of the report, I could not reprint all of it below, but all of the main points are included. I trust you’ll find this forecast very interesting, and as always, I thank Stratfor for allowing me to reprint some of their work from time to time. I highly recommend that you subscribe at Stratfor.com to stay a step ahead of world events.

    • Why Quantitative Easing Hasn’t Worked

      Much has been written about the Federal Reserve's monetary policy known as "Quantitative Easing" or QE.  We know that the Fed's intent for QE was to jump-start the economy by making more money available to the nation's banks.  Yet we also know that the banks, in most cases, have not chosen to loan that money, and instead have elected to reinvest that money with the Fed.  As a result, QE has not produced the desired effect, and bank lending remains in the tank.
      Today, I have reprinted the best article I have seen on the subject of Quantitative Easing and why it has not had the desired effects that the Fed had hoped for.  I think this article will help everyone better understand what QE is and why it has not worked as the Fed had hoped.  As always, your comments and suggestions are welcomed.

    • 2011: More Questions Than Answers?


      1.  More Questions Than Answers in the New Year

      2.  Long-Term Interest Rates: Correction or New Trend?

      3.  “A Fed-Induced Speculative Blowoff” by John Hussman

      4.  Will US Stocks Continue Higher in 2011?

      5.  Just Getting Back to Breakeven