Trading Outlook

With Europe in the crapper and lacking the balls to do something about it, China looking like it is going through a real estate bubble similar to the one the US went through a few years ago (and currently being underestimated like the one in the US was a few years ago), one has to wonder where can an investor put his money and grab some yield in 2012.

The US seems like a good candidate for one.  The economy has shown some signs of strength recently and with 2012 being an election year and approval numbers at all time lows one would think that incumbents who are looking to get reelected will do anything to help their cause.  The question of course then is do you invest in companies that do their business in the US or do you look at large multinationals?  Being that the rest of the world may be going south it probably is best to invest in strong companies that do most of their business within the boarders of the US.

Now with a slow down in the world economy seemingly a foregone conclusion, look for the dollar to continue to get stronger as investors flee to safety.  With the dollars strength rising look for inflation to remain subdued as commodity prices will drop significantly.  This will improve profit margins for companies and individuals which will help support the economy as well. This will make imports much more affordable at the expense of products domestically produced and will hurt domestic manufacturers.  However the outlook in the US will be positive.  The backstop that the Fed continues to provide will be huge in helping the US keep its head above water as it now seems like it is ahead of the curve especially when compared to it's counterpart in Europe.  Look for the global economic cycle to be turning in the US's favor next year.  It seems like the US will need to carry the rest of the world out of the mess politicians have created.  The leadership will not necessarily mean extraordinary growth until the rest of the world solves it's problems but I do see the US capable of continuing it's trend toward recovery.

Unless Europe implodes and there is war then all bets are off.