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The GBP will continue to rally versus the USD but slump against the euro and aussie. The British economy will succumb to inflation, over exposure to bad European debt, savers in the economy rather than spenders or any combination of the three. The market has not given Britain its just attention. The MPC seems to have spent 2010 hunkering down for 2011. But the central bank will have to respond to the bleak economic aspects especially if the market catches wind in the form of widening yield spreads.
Despite the bleak fundamentals for sterling, America’s deficit spending will weigh on the greenback. History is replete with examples where a fiat currency with a bloated money supply is unsustainable. The market will get this. And it is why the US will remain in war. Risk aversion is the only bailout that can keep the USD supported.
Mobile will be the new long term trend. Screens will get larger not smaller making tablets a hotter commodity than smartphones. Android will rule as Google makes more treaches into so called emerging markets.
The consumer will disappear. With the holiday season officially over, individuals will become savers again. Households are still saddled with debt and people will service debt and save the rest of their money. As consumers slow spending, consumer goods exporting economies like China and Germany will be the first to feel pinch. For this reason, China may disappoint the market with fewer rate hikes than anticipated as a slowing economy is a natural hedge against inflation. But who are we kidding? A slowdown in China is hardly a crisis as the Chinese economy will still to roar in 2011. This bodes well for commodities and the economies that export them.
Apple has officially become a long term trend with its passing of Microsoft in market chap and projection as the first trillion dollar company. Facebook will be the first company to raise $1 billion in venture capital and win an Oscar for Best Picture.
