The universe fundamentally functions on cycles, and cycles work fundamentally on Newton’s third Law of Motion – for every action there is an opposite and equal reaction (essentially). Because I strongly believe the laws of physics govern all that we both know and don’t know, I strongly believe in cycles, no matter if they are manmade or natural. Although economics is a manmade phenomenon, it is, nevertheless, cyclical in nature because it operates on the fundamentals of human thought, which are natural and predictable to a certain degree, unlike universal physical laws that predict precisely. History is replete with repeated cycles based on human activity. Economic activity is one of those cycles, and to this reality, I dedicate 2011.
All economic cycles are not precisely the same, but, in the abstract, they are similar enough to formulate broad-based predictions, and in this spirit, I suggest 2011 will be a banner year for the economy and the market. The major issues dragging on the economy are fading, as key economic indicators keep pointing to recovery.
New U.S. claims for jobless aid fell last week and factory activity in the country’s Mid-Atlantic region grew at its quickest pace in more than 5-1/2 years this month, indicating the economic recovery is gaining traction.
Yes, two key indicators (housing and unemployment) are lagging, and that is a concern, but those two indicators have hit bottom, and, in every cycle, once that happens, the only way to move is up, if you believe in cycles that is …
The 67,428 homes lenders took back last month were the fewest since May 2009. But even with the decline, it was enough to push the total number of repossessions so far this year to more than 980,000 — the highest annual tally of properties lost to foreclosure on RealtyTrac’s records dating back to 2005.
Specifically, housing and unemployment are dependent on economic activity, which is now consistently picking up (See first excerpt.). Since manmade cycles are imprecise, we still have issues that could delay the recovery; however, keep in mind, what man makes, man can unmake.
Bank of America Corp has started negotiating with powerful mortgage investors that accused the bank of failing to buy back bad home loans, in an apparent shift in the lender’s stance. Previously, Bank of America had said it would not be shy about fighting investors. Bank of America on Wednesday said the investors have agreed to continue negotiating instead of putting it into technical default over $16.5 billion of bonds.
As to the debt, deficit, and Federal Reserve policies, I have no reason to believe these too will not work out positively. History shows we have been here before, and we worked through these issues then, despite the doomsayers who, like clockwork, appear in every economic downturn.
Trade in the day; invest in your life
