Merrill Lynch outlook for 2009

This is part 1 of 2 parts, the second one is here. The Merrill advisers think that the economy will be going more the way of Japan than into the inflation that we have felt was the most likely outcome, arguing deflation over inflation. We don’t agree with this outlook, but it is important to get a view from both sides of the argument. The credit collapse based recession/depression has been seen in the USA (1930’s) and also in Japan (1990’s), the question is which one is the current crisis most likely to resemble? Thought provoking, although not necessarily enlightening.

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Deflation or Inflation? What to expect in 2010

We have felt for quite some time that the risk of deflation will be met by monetary and fiscal stimulation to the point where it will give rise to several strong years of inflation. This extract is by James Grant of ‘Grants Interest Rate Observer‘. The question of ‘when’ the scales will tip in favour of inflation away from deflation is likely to be at some point in 2010.

This is why we are letting our clients know that we are watching the long term bond yields and when we see a divergence either in short to long or medium term to long we will be encouraging people to consider a longer term fixed rate. When the five year and one year cross that might be a good time, meanwhile, because more rate cuts are expected in 09′ it would not be the time yet for this kind of move.

We don’t have a crystal ball but we are keeping our eye on the bond market so that we can try to gauge …

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Hillary takes New Hampshire

Its clear that I am a big fan of Barack Obama, I nearly want to start a rumour that he’s Irish and his name is O’Bama and then everybody else here would like him too…

Anyways, Hillary took New Hampshire, Pollsters and pundits got it really wrong on this one! Mind you it was a 39 to 36% lead and not nearly as impressive as Obama’s Iowa performance but it has made me think about something.

Bill Clinton was my favourite president (Other than George Washington) and Hillary got eight years of indirect experience during that time, she’s a very bright and well versed lady and she certainly knows the pains of the Oval Office, more importantly you get Hillary you get Bill, its one of the only ways to bring him back into the domain of decision making because he cannot serve as president again. Behind every great man is a woman, and sometimes behind every great woman there is a man, isn’t the 21st century great that way!

One issue I do have is that Hillary Clinton cried …

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Expect more inflation as Oil Reaches $100

Inflation… commodities bull run is not finished by a long shot! the upsurge in prices of the basic things that we all need is going to cause base level inflation to rise, the kind that could upset China and India’s growth as the things they manufacture become more expensive to make, however the market doesn’t embrace increased end user prices as the are suffering already from the same inflation.

For Oil to hit $100 a barrel is something that people used to joke about, today its real. There is upset in too many of the worlds oil producing regions. Nigeria has some of the best oil but they also have some of the best examples of abuse in human rights (read the story of Ken Siro Wiwa) and there are rebels out there fighting agains the way oil profits are distributed they are called ‘MEND’ or Movement for the Emancipation of the Niger Delta.

Here is something to think about, not a consipracy theory so much as a novel observation: What if it serves the Oil companies to have such …

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