First of all, let me point out that I was unable to enter the 'compose' text box to write this on my iPad. Very disappointing. Second, I am definitely writing this with an awareness of how one sarcastic or misplaced comment on the internet can come back to haunt you (see Social Network).
That said, I approve enough of this medium to share some hopefully insightful thoughts. I'd share my thoroughly honed opinions on directionality in the marketplace for 2011....if I had them. Truth is I can't formulate a strong enough opinion one way or another given the current information I have. I know what you're thinking, that a writer ought to have an angle to every snippit, blog or article.
I do see some interesting things occurring though. The US equities indices appear to be holding footing with strong inflows from retail investors to mutual funds and a decent amount of buying on dips. These are conflicting signals in my mind, the former signaling a top the latter showing decent support at certain levels. The remaining drag on growth in this sector has to be the 'jobless recovery', I think any boost in employment will do a great deal in continuing this rally. Inflation concerns are abound and could eat into margins, which would be very bad because this rally largely was due to a reduction in expenses versus revenue growth. If we see jobs and top line growth, rally extends in a major way.
Staring us in the face across markets, inflation, the word of 2011 in the markets so far. Risk free rates are steadily climbing because of this and action in commodities markets seems embroiled in it as well. It is sort of a transition period for investors in my opinion. We saw the all-out yield search that saw a fixed income bonanza in 2009 and brought high yield market prices to near generational highs in 2010, and now we are seeing some allocation rotation in a still low-yield environment. The inflation protection is going to have to come from somewhere given the firm expectations for inflation.
At least some level-headed certainty has been regained with the extension of tax cuts and an apparent taming of over-reactionary policy shifts (are there any other kinds?). With a veritable stalemate in Congress, economic growth can occur, because so often it is better for them to do nothing and let the market equilibriate than to interfere.
It remains unclear to me what my mandate is for my contributions to this collaborative effort, but this was a snapshot of a few things I see as relevant at the moment. Feel free to point out flaws in my logic, which I'm sure there are some, because I'd like to learn something as well.
