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Economic Outlook 2010 - Stocks
Economy | Stocks | International | Interest Rates | Recommendations
Outlook 2010
The stock market has benefited greatly from a depreciating dollar especially exporters. Unfortunately, the weak dollar is not a panacea for all of our troubles.

Although the economy has shown some signs of basing, key areas such as new orders for durable goods and consumer credit are still declining. Historically this has been associated with negative returns for stocks.

Washington’s meddling in economic and financial affairs, while well intentioned, will ultimately prove troublesome for stocks. Likewise, the markets have typically reacted poorly in the year before tax increases.

Our indicators suggest smaller capitalization securities should perform admirably during rallies. The weaker dollar may also benefit certain basic material stocks, especially those involved with precious metals. Select technology issues may also perform relatively better as this sector often leverages export opportunities.

Look for extreme volatility and poor performance for lower quality stocks.
Positives Negatives
Positive Weak dollar Negative Important business factors still negative
Positive Huge increase in money supply Negative Consumer credit declining
    Negative Rise in gold
    Negative Rising taxes and regulations
    Negative Expensive valuations, sector leadership lacking
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James News

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