Doug Kass: Here Are My Surprises To Watch For In 2011

1. The improving momentum of domestic growth at the end of 2010 continues into the first half of 2011 but proves ephemeral by the summer.
2. That improving momentum turns out to be nothing more than a brief respite and "recession fatigue," as reality and a new normal sets in.
3. Americans remain in a foul mood, as the jobs market fails to improve despite the recent downtick in claims.
4. Over there, multiple country austerity programs move Europe back into recession by year-end 2011. (Share prices of many large multinational industrials falter in the year's second half.)
5. China continues to tighten, but inflation remains persistent, economic growth disappoints (see surprise No. 15), and it's stock market weakens further.
6. Political gridlock and inertia in tackling the deficit incite the bond vigilantes. The yield on the 10-year U.S. note rises above 4.50% by the spring (see surprise No. 2).
7. Trust continues to be lost, as the uncertainty brought by changes in the administration (see surprise No. 7) and the emergence of a third political party (see surprise No. 8) adversely impacts consumer and corporate confidence.
8. Housing fades under the pressure of higher mortgage rates and the supply of shadow inventory coming onto the market in an avalanche of foreclosures. (A housing czar is named to implement a Marshall Plan for housing.)
9. An across-the-board spike in commodities pressures corporate profit margins and real disposable incomes (see surprise No. 3).
10. Price controls are briefly considered (and then rejected) by the Obama Administration as oil soars to over $125/barrel.