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2011 Outlook – Year of Recovery with Some Growth, Some Pain

December 29, 2010

Financial well-being for 2011 will be tentative, but improving. Here are some notes:

Hawkish Fed….. more QE in the wings after June QE2 ends; the Fed will simply not let the economy slide. Caveat: Major municipal bond defaults in states like California and Illinois, will require some intervention. California will hear from new Governor Jerry Brown soon and it looks like major state jobs layoffs are in the wings; estimates are pegged at one million employees will get the pink slip. State programs will be slashed. There will be blood.

>Manufacturing data released next week will tell us more about that sector. China invested $2.8 billion as of September in U.S. manufacturing.

>Orange freeze prompts Coca-Cola to say they will increase juice prices.

>Rare minerals and oil will continue to rise; that will impact all manufacturing especially technology.

>Hottest hiring sector: Healthcare; driven by Baby Boomer demographics.

>Hedge Funds: Best performer type: Mortgage Arbitrage Funds….buying and selling of MBS; Top three: Structured Portfolio Management up 51%….Midway Group up 49%…. Providence Investment Management up 36%; still some ops for 2011 as housing recovers.

>Apple iTunes Rental model estimates $1 billion in next 5 years; that means Apple stock remains solid.

>Barclays estimates Global oil industry to spend $500 billion in new development, 11% over 2010. That means jobs in that sector.

>Auto sector still shaky, but with GM in good position it will set the stage for more growth.

>Gold futures will continue UP.

>Technology ops: Intel cloud computing segment behind mobile apps; margins still solid on server products; Intel security embedded on chips using McAfee; 3-4 year growth;

More to come in the next couple days.

Sources: Bloomberg Financial; Surveillance Midday;

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