2009 tale of two halfs

For the third year in a row I put forth my expectations of the market.  Again these are in no particular order

  1. We are almost half way through the economic contraction as measured by GDP.  Third quarter 2009 will be the first positve one, but will be very weak.
  2. Consumers will discover that non-consumption is a good thing and will start demanding higher quality products.  A notion will be put forth that most of the planets environmental problems are caused the the disposable society.  This recession will be credited with saving the planet by changing consumerism forever. 
  3. Ford will be the only major US auto manufacture remaining at the end of 2009.  GM and Chrysler will be so radically changed it would be hard to describe or compare them to what they are now or were in the past.
  4. SELL US Treasuries and sell duration unless they are Treasury Inflation Protected Securities which you should keep.  Interest rates are going to rise and spreads will narrow a bit.  Short duration corporate bonds will be the sweet spot in the fixed income markets.
  5. Chairman Bernanke will print as much money as possible and be very accommodative with the new administration in order to keep his job.  Sell dollars and buy a portfolio of other currencies Friday, January 2.  Move back into the dollar late in the fall of 2009.
  6. Jobs will continue to be lost.  Some talking heads are noting that the initial claims are running up to the 80-81 record levels.  The US population is 50 percent larger that it was in 1981 so it would not surprise me to see several, million job lost months in the very near future. 
  7. China and India will lead the world out of this recession as they start building out their domestic infrastructure and develop there middle classes.  Southeast Asia will be the top performing region in the world in 2009. 
  8. I do not think peace will break-out all over the world and in fact this global economic contraction is only exaserbating many of the regional conflicts.  These conflicts will start changing US policies and President Obama will implement  a national self-sufficiency program for energy and food.   Pakistan is the powder keg and there are multiple fuses running in many directions. 
  9. Energy and Commodities will be the best performing sectors for 2009, but financials will make a major recovery at the end of the year.
  10. 2009 will be a year of conflict, false starts and significant changes in behavior.  Returns will be below historical norms but the foundation for a better 2010 and 2011 will be laid. 
While the news will be worse than 2008, the markets will perform better if that is any consolation.  From an asset allocation perspective, is 2009 a year to take more risk than I would normally or less risk?  More risk at the beginning (if your not in now skip this trade) less risk in the middle and more risk at the end. 
Posted by Bradley Fluetsch at 1/1/2009 6:07 AM
Categories: Speculation
Tags: invest profit stock bond predictions markets 2009 retire
 

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