Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022
Quantum AI Tech Stocks Portfolio Current State - 4th Jan 2022
The Alibaba Stock Market - 4th Jan 2022
Will Gold & Silver Be Investment Outcasts in 2022 Again? - 4th Jan 2022
Stock Market Happy 2022 Entry - 4th Jan 2022
Complete paradigm shift will make Gold the generational trade - 4th Jan 2022
Corsair MP600 NVME2 1tb Drive Sudden DEATH Failures - Back Up NOW! - 4th Jan 2022
AI Tech Stocks Portfolio Updated Buying Levels and Zones Part 2 of 2 - 3rd Jan 2022
Stock Market Sentiment Speaks: 2022 Can Be Your Best Year Ever - 3rd Jan 2022
2020-22 - Soaring costs of the West's Pandemic failure - 3rd Jan 2022
AUTODESK (ADSK) - CAD - Metaverse Stock Analysis Investing for 2022 and Beyond - 2nd Jan 2022
Stock Market Sector Themes In Play For 2022 - 2nd Jan 2022
Excuse Me Mr Gold. What Year Is It? - 2nd Jan 2022
Stock Market Early 2022 Should Continue Melt-Up Trend In January / February - 2nd Jan 2022
UK Energy Crisis WARNING 2022 - How to Avoid Huge Increase in Gas and Electric Fuel Bills Right Now! - 1st Jan 2022
Why You Need A PR Expert For Your Financial Startup - 1st Jan 2022
TENCENT- Chinese High Risk GAMING Metaverse Stock Analysus for Investing 2022 and Beyond - 31st Dec 21
Gold Price Forecast 2022 - The Golden Year - 31st Dec 21
Will 2022 Be Better for Gold Than 2021? - 31st Dec 21
Gold Stocks – Wishing And Hoping (And Losing) - 31st Dec 21
Sheffield Christmas Market 2021 SANTAS GROTTO at Peace Gardens, City Centre Sights and Sounds - 31st Dec 21
Nvidia Leaves planet Earth - AI Tech Stocks Analysis - 30th Dec 21
Google (Alphabet) AI Tech Stocks Analysis - 30th Dec 21
Stock Market Santa Rally Challenge - 30th Dec 21
Sheffield Christmas Market Stalls, Sights and Sounds 2021 - 30th Dec 21
Investment Roadmap for 2022 - 30th Dec 21
2022 – The Year of (Gold) Inflation? - 30th Dec 21
Overvalued Stocks and Housing Perfect Storm for Gold - 30th Dec 21
My Most surprising Crypto call to date - 30th Dec 21
What is a Rehab Clinic and How It Is Beneficial for People? - 30th Dec 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Hottest Places to Invest in 2010

Stock-Markets / Investing 2010 Dec 10, 2009 - 08:52 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleMartin Hutchinson writes: For global investors, 2010 is shaping up to be a year with two very distinct economic outlooks.

In the first "half," which is actually likely to end in early September, investors can expect a continued escalation in commodity prices, generally bullish stock markets and an ongoing focus on powerful monetary and fiscal "stimulus" initiatives. In the second "half," reality will reassert itself, and investors will find the going tough in many markets.


The real question is: "Which markets will win, and which ones will lose?"

When you take the time to look closely at the global economy, the disparity between the new year's first eight months and final four months - call it the "Tale of Two Economies" - that I'm predicting actually makes good sense.

Huge monetary and fiscal stimulus programs throughout the world tempered the decline in global gross domestic product (GDP) that we otherwise would have seen from the 2008 financial crisis. And that likely made 2009 easier to navigate.

The beneficial effects from those two paths of rescue will continue during the first eight or so months of the new year. At some point, however, the bill for those initiatives must and will come due.

On the monetary side, bubbles in commodities will fuel consumer price inflation, so interest rates will have to be raised. On the fiscal side, the temporary boosts to demand will either run out or will be prolonged by further stimulus. In that latter scenario, the bond markets will at some point focus on soaring deficits.

I see three possible scenarios playing out in markets around the world.

First, countries that have done big monetary and fiscal stimuli - think the United States and especially Great Britain - face big doses of inflation and a possible bond-market collapse.

Then there are countries that rolled out big monetary stimulus initiatives, but held off on a fiscal effort. One example is China, where the fiscal-stimulus effort was big. That country had a major budget surplus when it announced its plan. Ultimately, however, China will face a big inflation problem.

Finally we have the countries that deployed fiscal - but not monetary - stimuli, such as France and Japan. Those countries won't have an inflation problem. But they will have a bond-market problem. And that could lead to a renewed economic downturn as those countries cut their budgets to cope with the issues at hand.

Very few countries are in good shape on both the monetary and fiscal fronts.

A Tour of the World's Top Markets

Let's start our economic-forecast world tour with the region that's most likely to have the best 2010: East Asia.

East Asia suffered a sharp recession in the first half of 2009, as world-export markets plunged. But the region has experienced an equally sharp recovery since that time. In 2010, export volumes should continue to recover. One caveat: They may see some weakness late in the year as higher interest rates take their toll on the global economy.

If you want to pick the best markets, you should look for those with solid balance-of-payment and funding positions, and very little distortion from fiscal "stimulus."

Japan has a budget deficit problem, and a huge debt problem. Its interest rates are too low, too. However, it's one of the world's great export economies, its banks are now in decent shape and its real estate is decently priced. It probably will do no worse in the second "half" of 2010 than the first, because it should benefit from a bursting of the commodities bubble.

Japan is one market that's well worth some of your money, particularly in domestic-oriented shares.

China's fiscal stimulus was large, but easily affordable, because the country was running a budget surplus. However, its monetary policy has been more of a problem. M2 grew 29.4% in the 12-month period that ended in October. Since economic growth ran at "only" 8% or so, there's a bad inflation problem coming. Thus, China's the opposite of Japan. It will do pretty well during the first "half" of 2010. But it will suffer a credit crunch in the second portion of the year as the authorities try to do something about their new inflation problem.

Korea and Taiwan both look to be in pretty good shape: Neither had too much fiscal or monetary stimulus, and both have good foreign-reserve positions. The upshot: They should benefit from lower commodity prices. These two countries- half of the four "Asian Tigers" - have each enjoyed a hell of a run this year. Even so, they're well worth some of your money for the new year.

Australia and Indonesia also are well run and did not have too much stimulus. But both may suffer if commodity prices decline. Australia, in particular, is one of the world's major mining centers.

Traveling to the west, we come to India, which continues to enjoy excellent growth. But it has a serious fiscal problem, with a consolidated budget deficit of around 12% of GDP. On the other hand, India's monetary policy is well balanced. And its foreign reserves are quite strong these days.

On balance, India should enjoy a pretty good first "half" of 2010. But it may experience some tough times in the latter portion of the new year. India's stock market is highly rated, but may have further to go in the short term.

Turning to Europe, we can see that Germany looks to be in excellent shape. It has a cautious monetary policy - courtesy of the European Central Bank (ECB) - and a cautious fiscal policy. Its export position is excellent. Since 1990, Germany has traditionally been a slow-growth economy. This time, however, it could well surprise investors to the upside. And it shouldn't suffer too much from tighter money in the second "half." 

France, on the other hand, has a big budget deficit. I would be more cautious here, although it's worth noting that any crisis should be moderate due to France's fundamental strength.

Eastern Europe had a very rough 2009, but will have a better 2010. The best opportunities will be in countries like Poland, which do not link their currencies to the euro. Euro linkers/members will find themselves continuing to struggle with a currency that for them is overvalued.

Southern Europe should be avoided. Greece and Spain had huge real estate bubbles, and Greece now has a serious budget problem. Italy is in better shape, but its labor costs are uncompetitive.

Britain is a disaster area, and won't get better in 2010. In the new year's first "half," the rebound in the City of London will prop up the British pound and the real estate markets. In the second half, however, those props will be removed and the economy will lurch back into trouble. Britain had even more fiscal stimulus than the United States. It had too much monetary stimulus, as well.

Jumping across the Atlantic Ocean to Latin America, we see that Brazil has had a pretty good 2009. For instance, the country's stock market has more than doubled. But Brazil faces trouble in 2010. In the new year's first "half," rising commodity prices will prop up the country's economy. But in the last part of the year, political risks will once again assert themselves as commodity prices fall.

The government has this year shown a tendency to expand its control over the economy. This is bad news, and will show itself once the euphoria has passed.

The final stop on our whirlwind global economy tour is North America. There we find that Canada - like Brazil - will do better in the first "half" than the second part of the new year. But Canada's deterioration should be relatively modest. That country's monetary and fiscal policies have been sensible, so only a moderate slowing of growth is likely.

Finally, the United States will do okay in the first part of 2010, but faces monetary and fiscal crises in the second part of the year, with the predicted bond-market crisis and growing stock-market uncertainty. The U.S. stock market today looks to have gotten ahead of itself, so careful stock selection will be more important than ever. Call it a stock-picker's market.

It's possible that a crisis in one of the big emerging markets - probably China or Brazil - will be the catalyst that triggers the shift between the new year's two "halves." In the first part of 2010, we'll see generally strong markets and soaring commodity prices. In the final four months of the year, however, we'll see weaker economies and weaker markets.

However, it's much more likely that the change will occur right here in the United States.

One possibility is that rising inflation will cause U.S. Federal Reserve Chairman Ben S. Bernanke to - very reluctantly - tighten monetary policy. The other likelihood is that the difficulty of financing the huge federal deficit will cause big problems in the bond market. Quite probably, both will happen simultaneously.

I'm guessing that we'll see the transition occur in the late-summer time frame, especially since September and October are traditionally difficult months, for seasonal liquidity reasons.

The shift will very likely happen quite suddenly. It's unlikely that any of us will miss it.

[Editor's Note: Martin Hutchinson scours the globe for the "hyper-profitable" investment plays that he recommends for his Permanent Wealth Investor trading service. In a new report, in fact, Hutchinson not only uncovers the very best profit plays available today, he guarantees triple-digit gains. To check out this report - and these new profit plays - please click here.]

Money Morning/The Money Map Report

©2009 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in