This year had many meaningful moments: a Bin Laden capture,
a Japanese earthquake, a royal wedding, an occupied Wall
Street and we saw the U.S. credit rating downgraded. We
paid last respects to Elizabeth Taylor, Joe Frazier, Al
Davis, Amy Winehouse and countless others.
The financial markets, however, never looked back. They
discount the probabilities of what will happen in the
future. Here are five themes:
1) Interest Rates - Policymakers have done everything
humanly possible to maintain a zero-interest rate
policy in the hopes of spurring lending and encouraging
spending. A 2012 progresses, market forces should
rachet rates higher, which will negatively impact bonds.
2) Europe - There is a light at the end of the tunnel but
it will get worse before it gets better. Keep your
eyes on the Germans - if they allow the issuance of
"euro bonds", stock markets will rally as obligations
are again pushed into the future.
3) Real Estate - It's impossible to catch the bottom of a
housing cycle but investors with a 10-year time horizon
will hunt for bargains and find them!! With mortgage
rates at an all-time low, demand will emerge to help
spur the eventual recovery.
4) Politics - If you thought the partisan bickering in
Washington was a lot to swallow this year, brace up
as November's presidential election edges closer!!
5) Values - As financial stress and societal acrimony
permeate, folks and families will seek simpler
pleasures that aren't measured in money or status.
This will be the greatest silver lining on the 2012
horizon and at the end of the day, we will have each
other as we find our way to better days.
Sheila McKinney
