Some good news and some bad from BlackRock's chief investment officer, Bob Doll. His 12 predictions for 2009 (most of the bad news first):
- The U.S. economy faces its first nominal GDP decline in 50 years. Declines in wealth, rising savings rates, tight lending standards, and rising unemployment are among the culprits.
- Global growth falls below 2 percent for the first time since 1991. It will take time to repair economies in the U.S. and Europe; Japan continues its low consumption patters and declining population. Emerging markets should see some recovery by mid-year.
- Inflation falls close to zero in many developed countries, but widespread deflation is avoided.
- The U.S. Treasury curve ends 2009 higher and steeper than where it began.
- Earnings fall by a double-digit percentage again in 2009, the first back-to-back drop since the 1930s.
- High yield, municipal and investment-grade corporate bond spreads narrow.
And now, for some good news...
7. U.S. stocks record a double-digit percentage gain in 2009.
8. U.S. stocks outperform European stocks while emerging markets outperform developed ones.
9. Energy, healthcare, and information technology outperform utilities, financials, and materials. Doll prefers healthcare for defensiveness, information technology for some stability and some cylicality, and energy for cyclicality and cheapness.
10. Stock market volatility remains elevated as periodic double-digit percentage rallies and declines occur.
11. Oil and other commodities bottom and move higher by year-end as emerging economies begin to recover.
12. The U.S. federal budget deficit soars past $1 trillion as the government continues to grow.