i On The Market This will be the last i On the Market for 2011. What a crazy year it was – for sure.
As usual, with our last edition of the year, we are going to put on our Merlin hat and make some predictions for 2012.
2012 Election: Mitt Romney wins the Republican nomination, names N.M. Governor Susana Martinez or Florida Senator Marco Rubio as V.P. In an effort to prevent Ron Paul from running 3 rd party, Romney announces that Paul will be his Secretary of Treasury.
In November, neither Romney nor Obama gets 50% of the vote. Mitt wins the popular vote 48.7 to 48.5, but loses the Electoral College. Republicans pick up a few more seats in the house and takeover control of the Senate.
Wall Street rejoices at the mix and countless articles are written about how well stocks have performed with a Democrat President and Republican House and Senate. The market rallies more than 10% from the election to year's end.
Europe, China & Oil: The EU near misses catastrophe as the bungee recoils with the Union's nose within inches of the sidewalk. However, many banks get bailed out, at least 1 member gets kicked out, and at least 2 governments are voted out of office.
That's the good news.
The bad news is the EU heads into a recession much deeper than anticipated, the EURO gets hammered versus other currencies and their problems put China's economy on ice.
All this adds up to oil dropping into the mid $70s as the world economy snails along to start out 2012.
U.S. Economy: Fourth quarter GDP comes in around 3%, everybody cheers and there is talk of the U.S. economy decoupling from the global economy i.e. going it alone. However, that talk quiets quickly as Q1 GDP backs up and then Q2 comes in a little lighter.
The Federal Reserve surprise launches QE3 by March. That, combined with the stimulus of lower gas prices, starts to breathe life back into the economy in the third quarter.
Due to the slowdown, unemployment ticks back towards 9%, but peaks there and starts to fall towards 8.5% in September/October.
Overall, the economy grows at about 2% for 2012.
Stock Market: Due to worsening conditions in Europe and declining GDP numbers to start the year, stocks start the year on a rough note. First-quarter earnings dip a bit and companies issue muddled guidance, bringing the market down 7-8% for the year heading into spring.
That's when Ben Bernanke steps in and launches QE3. Traders respond positively, inching the equity markets close to break-even for the year.
During the summer, stocks flatten out and stay range bound until the Election. As we mentioned up top, the election's result invigorates Wall Street and stocks finish the year on a tear, putting the indexes into the plus column, 6-8% for the year.
Sports Championships:
NFL: The New Orleans Saints play the New England Patriots in the highest scoring Super Bowl ever.
MLB: The Cubs sign Prince Fielder, Matt Garza wins the Cy Young award and the Cubs make it into the playoffs in Theo Epstein's first year. Unfortunately for Cubdom, the Phillies turn the lights out at Addison and Clark in the NLCS. The Phils go on to the World Series and beat the Anaheim Angels in Phat Albert’s first year on the left coast.
NBA: The Lakers are no longer the best team in L.A. The Clippers surprise everybody and make the NBA finals against the Miami Heat. LeBron gets his first and only championship.
NHL: Hockey Town becomes title town again as the Red Wings finish off the Philadelphia Flyers in an epic 3 overtime game 7.
Finally, the Mayan calendar proves to be wrong, the world doesn't end on December 21 st .
Have a great holiday season and we will see you next year.
The information in this newsletter is for informational purposes only. It is not intended to be advice, recommendations or endorsements of any investment or investment vehicles. Investing involves risk and you should consult with a financial professional before investing any money.
