'Fast Money' Recap: 2011 Predictions

NEW YORK ( TheStreet) -- The markets closed the year on a mixed trading day.

The Dow Jones Industrial Average added 7.80, or 0.07%, to 11,577.51, while the S&P 500 lost 0.24, or 0.02%, to 1,257.64. The Nasdaq was down 10.11, or 0.38%, to 2,652.87.

Brian Kelly said on CNBC's "Fast Money" TV show that 2010 turned out to be a decent year after Fed Chairman Ben Bernanke's Jackson Hole speech.

But Steve Cortes said Bernanke may face headwinds from a hawkish Federal Reserve board in 2011 and pressures to remain independent from Congress.

JJ Kinahan said the tough economic times leads him to believe the markets will struggle for the first part of the year before picking it up towards the end of the year.

Stephen Weiss was optimistic about the markets because of the liquidity generated by what he called a "global equity giveaway" and China buying bonds. He said an improved unemployment picture could help lift the markets.

Peter Boockvar, Miller Tabak equity strategist, said a better economy doesn't lead to a better market. For instance, the market has risen 90% off its March 2009 lows despite a soft economy, he said.

Peter Schiff, head of Euro Pacific Capital, said a weak dollar will continue to put upward pressure on commodity prices and interest rates. In response, the Fed can either aggressively tighten or continue to print money and unleash a great economic disaster, he said.

Schiff said commodity users haven't passed on the higher commodity prices to consumers yet, adding interest rates are starting to rise. He said the 10-year bond could rise as high as 6% by the end of 2011.

Is there a bubble ahead for the commodity markets? Weiss sees the bubble bursting sometime after the first quarter. He said commodity investors aren't taking seriously enough the slowdown in China's economy. He also said commodity prices are driven so much by speculation.

Kelly, though, said there is a lot of room to run for the soft commodities because of serious supply constraints on corn, wheat and orange juice.

Is there anything to read into the Shanghai stock index being among the worst performing stock markets in the world? Cortes said China is trying to thread the needle between rising inflation and a slowing economy. He said China could fall off the cliff it is forced to raise rates.

Commenting on the rally in the financials led in December, Kelly said the markets and the economy need the leadership of the financials. He also said brokers will do much better, with the IPO and M&A business improving.

It's been a crazy year for Visa ( V), which endured a 30% reversal in 2010. Kelly said Visa's fee income was dramatically affected by the new federal banking regulations. Weiss added it was a not a good year for retailer stocks.

While Apple ( AAPL) closed up 52% in 2010, other large-cap tech stocks didn't fare as well. Colin Gillis, financial research director for BGC, told the panel he would consider Microsoft ( MSFT) a good value play. He liked the company's yield and impressive sales of the Windows 7 operating system.

His second pick was Google ( GOOG), though he was worried about the company's inability to manage expenses. Still, he said Google has a great balance sheet, is good in deploying its cash and has a solid core search business.

CNBC tech reporter Jon Fortt sees Apple focusing on softare and services in 2011. He said he expects an iPad 2 with two cameras, a Verizon iPhone, a new iPhone and new powerbooks. Weiss said he liked the derivative trades off Apple, including Qualcomm ( QCOM), Verizon ( VZ) and Finisar ( FNSR) .

Boockvar offered a contrarian view of the Nikkei 225 index, arguing it will be on headed to the upside in 2011. He said higher global inflation and commodity-led inflation will drive investors to Japanese equities.

He also said Japanese households will flock to stocks to protect themselves from higher interest rates and inflation in an overleveraged country.

Cummins ( CMI) was the best performing S&P stock in 2010, up 140%.

Cummins CEO said the 2011 outlook is good, as he expects its emerging market business to grow 20%. He also said Cummins is seeing the North America truck market returning along with the power generation business.

What will be social media trends for 2011? Michael Wolf, managing director for Activate, predicted that social search results off of Facebook, Twitter and Yelp will become more important than those from traditional search engines like Google and Bing.

Wolf also said social gaming, including such games like Farmville and Cityville, will explode in popularity next year.

In the final trades, Kelly and Cortes like the U.S. dollar. Kinahan liked Mosaic ( MOS) while Weiss liked Qualcomm ( QCOM).

--Written by David Tong in San Francisco.

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