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  • I'm hosting an exclusive online video event, "Profiting from Crisis in Europe". Investors are scratching their heads trying to figure out how to make money in the markets with Europe's debt crisis seemingly expanding everyday. Go to http://www.100kportfolio.tv/video to find out more.

We are in the final stretch before Christmas. Yes, the blatant commercialization of a great holiday gets old. But it never manages to dampen my Christmas spirit.

Online sales are up 12% over last year. And brick and mortar sales are coming in strong too. SpendingPulse reports that clothing sales are up 9.8%, jewelry's up 2.6% and furniture sales are up 3.4% over last year.

Unfortunately, retail stocks haven't done well after that early November rally.

*****The S&P 500 looks poised to challenge resistance at 1,250 today, despite the threat of downgrades for European countries France, Spain and Belgium.

No surprise the euro is down against the U.S. dollar. And European stocks are also clearly enjoying a "weak currency" bounce, just like the one that carried U.S. stocks to their current level.

Now, U.S. investors have to get more comfortable with a strengthening economy as the next catalyst for stocks. GDP estimates for 4Q and 2011, are rising. Goldman Sachs just upped its 2% GDP growth target for 2011 to 3.4%.

That's a healthy upgrade, especially when we consider that 2.5% growth is needed to bring the unemployment rate down. So Goldman is basically changing its outlook from one where the U.S. continues to lose jobs, to one where we could actually add a significant amount of jobs.

Of course, more jobs means more income and more spending. And while that would certainly raise inflation expectations, it also raises the potential for a virtuous cycle of faster growth and falling unemployment.

It still seems to me that energy stocks, and especially oil stocks, are one of the big beneficiaries. If growth remains tepid, oil benefits from the weak dollar. If growth picks up, oil benefits from increasing demand. It's win/win for oil.

*****New price targets for Apple (Nasdaq:AAPL) suggest a +$400 billion market cap. That would make Apple the world's biggest company and its market cap would rival countries like Belgium, Poland and Sweden.

Of course it's not a fair comparison to pit a corporation against a country. Still, I wonder if you'd rather be Apple CEO Steve Jobs or own Sweden?

As Steve Jobs, you'd be ridiculously wealthy. But think about the pressure to keep churning out top selling gadgets...

*****England appears set to start raising interest rates next year. And England's government is starting to implement budget cuts, also known as "austerity measures" valued at around $200 million.

That would approximate to roughly $600 million in budget cuts here in the U.S.

Despite the recent Congressional election that seemed to validate the grass root "austerity" movement in the U.S., our Congress just extended tax cuts that are estimated to $858 billion.

What gives? Is "austerity" real, or is it a political buzzword?

On a household level, Americans have imposed some austerity. Savings are up and debt is down. But it's the exact opposite at the Federal level.

Are our political leaders operating against the will of the people? Or are they reflecting the localized will of constituents who don't want to see their earmarks cut?

I think it's an interesting question because it seems to me that elected officials lose votes if they cut spending. Cut Medicare, and retirees vote you out. Cut farm subsidies and farmers vote you out.

I'd like to hear your thoughts, and solutions about austerity: [email protected].





Posted 12-20-2010 5:36 PM by Ian Wyatt