False Street says hello to the world!

False Street says hello to the world!

Yes, after couple of "shared" posts I would like to write something of my own. I started this blog because I wanted to archive articles and posts from various bloggers in one place. I already have a Google Reader shared page, but wanted to make it bit more like a real blog. So... this is it :)

Most of the time the posts will be shared from other bloggers and also from some other pages. I don't do this for money or to be Zero Hedge one day, but just for my personal record. I'm employed as a stock market analyst in small company and most of the time I try to comment on the market action.

But I don't want this blog to be about day trading, but about financial markets and the economy, and occasionally about art & some crazy stuff I find when surfing the web :)

This first post is also good place to write some kind of outlook for the year 2010. I'm not good in making long time predictions, but for my own personal record only, I should make an outlook for the new year.

It will be short one, because as I said, long term outlooks are not my strong point, plus I'm pretty lazy... So here we go :)

This year will be again volatile. I expect that in 1Q and 2Q there will be a continuation of the market rally, but bulls will start to lose their breath. Strong expectations of earnings will just not come true. In the second half of the year, I expect a market correction. In total the S&P500 will end the year with a single digit percentage profit.

The U.S. Dollar should continue to fall and I don't expect a rate hike from the Fed this year. This background will surely be positive for stocks. At the end of 2009 I expected a very slow recovery of the labour market, but the census in the US will be a big positive. However, the trend in households deleveraging will continue so don't bet on a fast recovery. This is a credit driven recession, not a simple inventory recession.

A big risk for this outlook are bond vigilantes. Rising yields because of rising public debt can stop any recovery. But didn't the central banks and governments just "kick the can down the road a bit"? I think they did. They just transferred the problems from private companies onto our shoulders. That's not a solution, that's just pretending to be a solution. The day of reckoning will come... but it will not be 2010. Japan can still service its debt which is twice as large as their annual output. One day the music will stop. But I'm sure we will all know by then :)