Checking My Words

I like to periodically check on my predictions. Otherwise, what's the point of making them?

From July 6:
1. Unemployment will be revised upward any day now to about 9.7%. Well, Cash 4 Clunkers plus the Census temps have put a momentary stop on the downward slide. No real jobs have been made, though. Layoffs are driving the stock market spike. Good stuff, right?
2. The political masses will call for a second stimulus. (Biden is already greasing the wheels) Again, the surprising success of Cash 4 Clunkers has delayed further calls for the second stimulus. Or, in the alternative, Cash 4 Clunkers IS the second stimulus. In which case, we're in deep fiscal trouble.
3. Borrowing rates to support the stimulus will reach critical levels as investors demand a greater risk premium than the USG is prepared to offer. As I've covered recently, there is a lot of pressure on government bonds. Only the extreme bears and the politically entangled are touching them.
4. Fed loses credibility as it suddenly buys up Treasury debt to make up for weak demand. I like how the press is reporting that the Fed is winding down recovery programs related to debt purchases when in fact they are extending them for an additional month. How this distortion happens is beyond my comprehension.
5. Inflation chicken littles (myself included) and bond vigilantes (Gross, et al.) will issue even more dire warnings about fiscal projections. Yesterday's investor pages were littered with discussion about soaring interest rates in the near term (2011). I'm still waiting on the next play by Gross and El-Arian -- any day now.
6. Stock market volatility (as measured by the VIX) will be back to 2008 levels. VIX insanity!
7. Oil producing nations, Russia in particular (especially as it faces the threat of bond default again), will slash production. The resultant price of crude will keep recovery forecasts for the US economy pessimistic. Inventories are high everywhere, but so-called speculators are still bullish on crude, thus delaying threats of production reduction. Russia is in trouble, though. They may threaten a reduction just to drive oil up past $100/barrel. How else are they going to prop their banks?
8. Even CNBC will talk about the liquidity trap. Simply, the threat of inflation is not enough to get sideline money back in the game because there is still too much fear. Cramer says CITI is a must buy. Infer what you want about that tidbit, but inflation talk will creep up again, especially when the pro forma October pullback comes and the Fed is forced to buy crates of government bonds to support another round of bailouts and stimulus.