25IQ

I think Goldman is bit too optimistic about the economy so I would take their numbers up .25 on unemployment and down .25 GDP.    

http://www.zerohedge.com/article/goldmans-roadmap-losing-all-credibility-and-propaganda-based-utopia 

The U.S. economy will grow at a 2.7 percent rate next year, up from a previous forecast of 2 percent, and 3.6 percent in 2012 

“… private-sector debt/income ratios are still likely to decline further. But it is the pace of deleveraging——which corresponds to the level of the private-sector balance——that matters for GDP.  As the pace of deleveraging slows, the private-sector balance falls, and this implies a positive impulse to GDP growth. 

Finally, we are not saying that the economy will feel good from a ‘Main Street’ perspective. We only expect a gradual decline in unemployment as growth moves above trend, to 9¼% by the end of 2011 and 8½% by the end of 2012. 

Because there is so much slack, inflation is likely to stay well below the Fed’s ‘mandate-consistent’ level of just under 2%.”

On average, economists surveyed by Bloomberg expect the U.S. economy to grow 2.5 percent next year and 3.1 percent in 2012.   Goldman recommends:

Long basket of crude oil, copper, cotton, soybeans and platinum will gain 28 percent.  For its top trades, Goldman recommended betting on a decline in the value of the U.S. dollar against the Chinese renminbi via two-year non-deliverable forwards for an expected return of 6 percent.

which seems directionally wise but the gains will probably be less than that predicted by Goldman.   I think food and energy are the best of these commodity bets.   Buffett won’t make predictions like this (and neither will I, at least in terms of actually making bets) but Goldman did:   

The S&P 500 will likely end next year at 1,450, up 20 percent from 1,206.07 .

Last year at this time Bill asked me “What is your current thinking on the stock market?”  and I said:

Tying to pick a number for the S&P for December 2010 is a mug’s game in a year’s time frame– but for fun will say that I think 1,300 is too high. It is no longer possible for companies to “cut costs” on their way to higher profits on lower sales. US small business is flat on its back and way worse off than the numbers show.  We will likely see at least some double dip as the stimulus wears off– a lot of the recovery we have seen so far is statistical.  For example, if a US firm books revenue from employees working in India in call centers that increases US GDP, which is a deeply broken approach. A car assembled in the US from Chinese parts is not what we once saw from an assembled car in the US as a contribution to GDP. When hiring starts again people will return to looking for work and that will keep unemployment up.  If someone put a gun to my head and said “pick a number for S&P end of 2010″ I would say 1,100.

But put a gun to my head again re S&P 500 in December 2011 and I would say 1,350.