March 04, 2009

Clearly, big issues of coming years will be the survival of the European Monetary Union and the Euro.

Banks in Austria, Italy, and Sweden lent heavily to Eastern European nations, often in the lending country currency. After the collapse of many Eastern European currencies, these loans are now more expensive to repay.

As our readers know, we believe that corporate profits are the key determinate of stock market appreciation or depreciation.

For those who sell short - retail, finance, and real estate continue to be attractive industries from which to pick short sales.
In the U.S., calendar 2009 could easily see a $2 trillion budget deficit. The budget's official projection is for $1.75 trillion, but the actual number will be higher due to the traditional rosy scenario modeling with unrealistic assumptions about tax receipts.

Cyclical rally in a bear market or reflation trade - opposite of deflation. The aggressively loose monetary policy is only starting to seep into the economy. As the year goes on, the substantial reflation efforts engineered by the Fed should start to show results. Reflation policies can include reducing taxes, changing the money supply and lowering interest rates.