CEO

I hate making predictions.

I got the tech wreck and sub-prime right, but was far too early on those predictions.  Importantly, the predictions below could most certainly be wrong.  We live in a highly complex world.  We can measure instability, we can score up risk but we can’t precisely know timing.The clear risk to me today is in the bond market.

• U.S. stocks will remain in an uptrend fueled by a strong dollar.
• Tax cuts, infrastructure spending and $2 trillion in tax repatriation will drive capital flows to the U.S.
• The European sovereign debt crisis will be the first major crack to crack. Unmanageable debt in P ortugal, I taly, G reece and S pain.  Include France and Germany in their dysfunctional union.  Confidence in government/political leadership is lost.
• The European banks sit on the fault line. Watch the banks.  Hope so… Not so sure.
• The smart money races out of EU banks to U.S. dollars and U.S. assets.
• In China, debt too is the major concern. Ghost cities lacking rental income will prove unable to support the structured debt that financed the construction.  Defaults mount.
• Drastic measures are put in place to prevent the flow out capital to the U.S.
• Gates, tariffs, currency wars escalate – trade wars escalate.
• Loss of confidence in government here, there and most everywhere.
• Global and U.S. inflation become a major concern as global growth remains well below the average of the last six post-recession expansions.  Click here for a great chart.
• Stagflation returns. Low growth/high inflation.  Interest rates move higher with the 10-year touching 3% this year and 6% within a few short years.
• The great bond bull market is over. Bond investors lose money.