The bear market in bonds will be confirmed globally. While interest rates likely bottomed in 2010, a significant rise in rates during 2011 will confirm a bear market trend for smart money investors. This bear market will continue until the global currency market is restructured.
Precious metals will surprise on the downside in the first half and surprise on the upside in the second half. Gold will top $1650 and silver will top $50. This will confirm the third phase of the bull market in precious metals.
A return to the energy sector in a big way. Energy companies have disappointed since 2009 due to a softening in US demand and the BP disaster. Oil will exceed $100 and capital will start flowing into energy investments as it did in 2007 and 2008. Natural gas and alternative energy will also rebound.
Global stock markets will correct in the first half but end higher for the year. June and July will be a pivot point for stock markets. Capital flows from bonds to equities will accelerate and investors will begin to view the stock market as an inflation hedge rather than value proposition. The S&P 500 will top 1400.
Increase in political rhetoric and class warfare leading up to 2012 elections in the US. Capitalists will continue to increase their wealth while laborers in developed nations will suffer from stagnate wages and rising expenses.
QE3 will be announced at the rate of at least $100 billion per month. This will continue indefinitely in order to finance trillion dollar deficits.
The dollar and US investments will outperform other currencies for the first half of the year lead by a fall in the Euro. However, by the fourth quarter, the dollar will begin a slide to new lows as it becomes evident that the Federal government must bail out state and local governments.
A retirement trend will begin to become mainstream in baby boomers looking to reduce costs. Instead of taking on a second job to live in retirement, some will look to retire in cheaper counties. Mexico, Costa Rica, and Panama will be the primary beneficiaries.
Proposed tax overhaul including legislation for a VAT tax along with an extension in the reduction of social security taxes. There will also be additional capital controls and asset reporting legislation.
