A Forbes piece by Gary Shilling, with which I pretty much agree. His investment themes for 2007:

• Housing prices will collapse
• The Fed will ease when house prices collapse; meanwhile, the yield curve will remain inverted
• U.S. stock prices will fall, perhaps below the 2002 lows, in the midst of a major recession
• China will suffer a hard landing due to domestic cooling measures and U.S. recession
• Weakness in U.S. and China will spread globally, dragging down economies and stocks universally
• Treasury bonds will rally
• The dollar will rally, but only after the recession becomes global
• Commodity prices will nosedive.
• Maybe global and chronic deflation will commence in 2007
• Maybe U.S. consumers will start a saving spree, replacing their 25-year borrowing and spending binge<
• Maybe deflationary expectations will become widespread and robust
• Speculative areas beyond housing may suffer in 2007

“The huge gap between speculative financial markets and economic reality has persisted for a decade. It will probably be closed with many tears in the next recession, only adding to its depth.”