2010 preview:
By Daniel at 23 December, 2009, 1:52 pm
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2010 is an election year and the government spending machine will be running full speed.
The bulk of the stimulus package will be spent in 2010,
Although most will go to social spending those dollars will still keep some parts of the economy from declining.
Foreign interest rates will increase in greater numbers and sooner than US interest rates resulting in a weaker dollar in the first 6 months overall.
Companies will sell more bond and stocks to raise capital.
There will be an increase in mergers and buyouts due to low interest rates, increased foreign investment capital inflows.
Profits for companies will show some increase. Whether it is enough to pull the PEs down a bit or not will depend upon investor confidence.
2nd half of 2010 will likely see a rate increase in the US. This may or may not result in a downward trend for the market depending upon a number of other factors.
Banks have to report the value of all assets onto their books. Creative accounting may hid some of this impact, but isn’t likely to be able to hid it all.
Additional government promise to spend on a jobs bill will have some positive psychological effect. Such jobs bill creation and spending usually comes about near the end of a downturn. Most of the money won’t be spent until late 2010 and 2011.
Dollar will continue to shrink as a part of the reserve currency during first half but could see an increase in its share during second half of 2010.
Cap and Trade will become the item of public discussion. Positive and negative impacts will move market segments accordingly.
EPA will continue to be more active in formulating new regulations on industry and business.
National Welfare Health Care will have become law. Medical supply and insurance companies will rise in value as future increase in profits becomes more likely. Taxpayers will be the subsidy program for this.
Energy prices will rise during the spring and summer of 2010. Price pull back fall and winter of 2010 not likely to be significant due to increased world demand and a constriction of future supply due to reduced investment in energy discovery and development.
Foreclosure rates will continue to increase and will dampen the strength of the market movement with the potential to stop or turn the market in a negative direction.
Regulation of banks and financials will be weak, slow in coming, and will have many exceptions and loopholes.
I am sure there is a lot more that can be added to this.
- optimistmiser
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