Further Comments on 2011 Forecast
It is interesting to me that economist A. Gary Shilling’s 2011 forecast which came out on John Mauldin’s website last night comes to somewhat the same conclusions as we presented. While Shilling comes to his conclusions with a different method his forecasts points sideways to down action in many areas and does provide areas where he sees upside. See Mauldin link in our link area.
A review of the tables we presented yesterday will show we see annual volatility below the long term average in stocks and bonds and above the long term average on the dollar and most commodities although meats will hold to a tighter range as the pass-through input costs will keep prices from as big a decline as in grains. You will note also that copper volatility is forecast near the long-term average while soybeans which are more naturally volatile than feed grains are forecast lower than the long-term average.
Almost forgot to mention oil. In my opinion oil is not really a market, prices are set by the oil companies and oil producing countries working loosely together. It is a process of working various price tiers and forecasting to the public ahead when the plan is to move to a higher tier. In the last three months the oil group has been telegraphing that crude is headed above $ 100 a barrel and you the public should get ready for that eventuality. I don’t think it is going to happen this time.