2nd Quarter Review

Download BFP 2Q09 Outlook

This is a short review of the 2nd quarter with my thoughts on what the outlook suggests for the near future. Feel free to download.

Essentially, the U.S. economy is likely to grow very slowly, at best, over the next 18-24 months as consumers and corporations continue to de-leverage and save. Developed markets remain highly linked to the U.S. economy and thus will follow our lead. Slow growth, high government debt and deficits. Emerging markets will do better as they generally had healthier balance sheets prior to the recession as well as higher investment and savings. They are also, by and large, commodity driven economies.

Equity markets are probably no better than flat to slightly positive - see earlier post - over the next 18 months. Fixed is mixed - inflation risk is real and that's not good for bonds. But, the credit dislocation suggests that value still exists.

Potentially attractive investments include commodities, other inflation hedges such as TIPS and Bank Loans. Oil and Gas may also be attractive as energy prices potentially go higher.