The Mayan Long Count Calendar does not predict the End of the World on Dec 20, 2012. The End of the "4th Creation" is just a normal cycle turn among many ancient time frames. The Maya pointed to many post 2012 cycles. The ending of the 4th creation should be a time of celebration in anticipation of the 5th creation. Western Central Banks are planning well into the first year of the 5th "world."
Our 2011 theme of "The Great Differentiation" unfolded in a manner different from our predictions. The differentiation occurred with much stronger benefit to US interest rate structures than we had anticipated. But differentiate nearly everything done did. The false hopes of the credit super cycle acme, that all credits and countries are the same, came undone in spectacular fashion. The positive consequences of the decline in term rates behind a marginally growing economy are under appreciated in our opinion. We do not adhere to the widely held view that 1) low rates are "bad." 2) Term structures are historically distorted or out of line.
The extreme volatility of 2011 was the second ripple of the financial crisis shock wave. Most now look for high volatility and constant extreme short term opportunity to continue. We do not. What after shock we do see should peak in Q1. Trading time frames should attenuate as the cycle calms down. We would become more optimistic if/when 1 day's net change ceases to be analyzed in terms of "risk on" and "risk off." Deferred Eurodollars (a proxy for post-Maya opportunity) experienced over 300bp of peak to trough movement in 2011. (The 10 year hi/lo was 3.70 in Feb to 1.72 in Sep) This extreme range was even more remarkable given the ZIRP was well entrenched and accommodation promises were solid. A range of even equal magnitude in 2012 would require either collapse or consistent growth surprises. We are doubtful of either choice.