Research Outlook 2007 Economy Stocks International Bonds Market Studies Research team Download Economic Outlook Summary Booklet

Stocks

POSITIVES

Supply of stocks falling

Dollar weak

Positive momentum

Lower energy costs

Pre Election years

 
NEGATIVES

Weak money growth

Inverted yield curve

Housing bubble imploding

Gridlock in Washington

We look for another volatile year with stocks starting strong and then reacting to economic problems.  Volatility and declining markets are often seen in advance of economic contractions.  Gridlock in Washington and attacks on the dollar by foreign bears will make pre-election stimulation to benefit stocks very difficult.

Small cap stocks may lead an early advance.  In the down markets to come later, large cap stocks promise to hold up better.  Value stocks do best in declining markets and should outperform overall.  Non-cyclical, finance, and utility stocks are suggested.