2011 Outlook (Cont) - Doom and Gloom is So 2009, Or Is It?

Well, we have given you the virtually unanimous bullish projections of major street analysts for 2011 and the fringe element End of the World As We Know It call of one Mr. Gerald Celente. I still feel something is missing, namely a "responsible" bearish counterpoint on the outlook for 2011. So for those contrarians out there, let's take a look at some comments by some "go to" bears for some alternative thinking.

• Alan Abelson - Barron's lead columnist is well-known for his uber-bearish tone and was very right on the aftermath of the crash and fairly wrong consistently fighting the "recovery" all the way up. He has never met a disappointing economic report he did not like and his most current headlines have been "Tis the Season to be Wary" and "Signs of a Top", with the underlying theme of "Everyone bullish, time to be bearish". Most notable recent observation: "Unrelenting deleveraging of household debt, rise in cost of food and fuel, stagnation of income, and the negative wealth effect of declining home values strongly suggest discretionary spending will disappoint in 2011. Margin debt is at its highest since Sept. 2008 and any forced unwind triggered by an unpleasant surprise-and there will be one--could be very, very ugly."

• Nouriel Roubini - NYU Professor, self-proclaimed predictor of the credit crisis, and Dr. Doom himself. "Global economic growth will be marginally weaker than this year and the U.S. will not emerge anytime soon from the worst unemployment crisis in decades. 2.7% GDP, 9.5% unemployment in 2011. Risk of double-dip now lower at 15-20%". (for Mr. Roubini that is downright giddy...)

• Robert Prechter - of Elliot Wave fame and technical/Fibonacci/sentiment guru... another who claims to have called the "crash", while many dispute the timing of the call. Cutting to the chase, he says "market flashing warning signals with bullish sentiment almost a carbon copy of the recent past.." However, Prechter has been making this prediction since April, reiterated it in October and December, and had the S&P topping at 1000-1100. To his credit, bearishness in 2007 and bullishness in Spring of 2009 has won many converts and one must be respectful of his analysis. Although not directly from Mr. Prechter, one Elliot Wave site I frequent has a very interesting long-term "descending triangle" technical analysis which has the S&P revisiting the 850 area at some point.

• Meredith Whitney -former Oppenheimer analyst, owner of own advisory firm, banking industry expert, married to former pro wrestler/TV personality, vilified during the banking crisis for bearish calls, bodyguard-protected, and once called the "Dollar Dominatrix" (was not amused and it was never repeated). Has been all over the news recently with her prediction for a muni bond meltdown in 2011-2012, calling it "the next major financial crisis brewing." Is bullish on certain sectors, especially agriculture-related.

• Bill Gross and Mohamed El-Erian - PIMCO co-head investment heads, very very intelligent and thoughtful guys who can run economic circles around just about anyone. GDP growth in 2011 3.0-3.5%, a revision up from prior forecasts but, "structural issues remain unaddressed, including persistence and nature of elevated unemployment and extremely high public and private debt levels..U.S. is kicking the can down the road, borrowing from the future to enhance growth today."

• Peter Schiff - EuroPacific Capital, well-known TV contributor. "What lies ahead is a new era of rising interest rates, soaring consumer prices, increasing unemployment, economic stagflation, and lower living standards. Government policies a lethal combination. Bondholders especially beware. Top investment themes: 1) dollar demise and bond collapes 2) buy emerging markets and foreign currencies 3) buy precious metals and commodities. Very bearish on the housing market, seeing a possibility of further 20% price decrease in home values."

• Barron's 2011 Outlook. Kopin Tan, Senior Barron's editor, is the best print commentator out there, I think, and put together the 2011 Outlook. Within the lengthy piece, there were several nuggets from "on the record" analysts who while forecasting a flat to up year for equities still had some sobering thoughts. Credit Suisse's Douglas Cliggott, "Profit cycle unusually dependent on government borrowing... spending will need to be cut and taxes raised, slowing economic growth at some point...expect profits to peak in mid-2011." Morgan Stanley's Henry McVey, "None of the longer-term issues resolved...too much debt, wage growth subpar, central band running out of bullets..we're seeing a reprieve engineered by the central banks."

• Doug Kass - Seabreeze Partners and the Street....all-around smart market observer and trader who annually publishes his "biggest surprises" for the coming year.. "Strong first half, weak second half, jeopardizing corporate profit forecasts..Europe could be back in recession by end of year..housing market weakens..rising commodity prices drag on economy and stock market, which ends up flat..gold has wild swings...China overplays economic hand...improving U.S. economic conditions prove ephemeral and brief respite as "recession fatigue' sets in and optimism fades, creating foul national mood..."

• Niall Ferguson - Harvard University socioeconomic historian, prolific author, media star and "Mini-Me" to Roubini's Dr. Doom. "The U.S. is on a completely unsustainable fiscal course with no apparent political means of self-correcting."

.... what can one really add to that final thought....

(Note: a friend commenting on the post last week "2010 Post-Mortem" says I should have spoken about the "first five days of January" rather than January as a whole as an annual indicator..I have still seen it discussed both ways but a very fair and important comment..as it would have pointed to a positive rather than negative 2010, if you really believe in any of the Street "truisms")

 

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