New Year's Eve Edition

Good Morning All,

I don't believe there is much left to say about the past year that has not already been either mumbled in one's sleep or screamed from a rooftop, so let's move on to the coming battle for safety and sanity in 2009.

On January 20th the world will finally be rid of George W. Bush and the last remaining puppet masters that have surrounded and managed this forlorn Presidency. There could be no better time for a positive beginning and by all appearances, no better emerging leader than Barack Obama, for it is at these watershed moments in history that such dramatic change is not just necessary but demanded. The words and themes of the seemingly endless election campaign were all about change and as the days and weeks became months, the problems in America grew worse and the global economy which had appeared to be coasting... collapsed, bringing not simply urgency to the fore, but desperation. Now Barack will inherit all of the above, including the cobbled together bandaid solutions of what had become the Paulson/Bernanke administration.

The words to look for in 2009 have already been tossed about and they include infrastructure and trade protection, the former being a positive, while the latter looms as a potential menace. It does not however appear that Obama wishes to revisit the Smoot-Hawley tariff bill of the 1930's, nor does it seem that labour is in any position to make unreasonable demands. Regulation will likely be another hot topic and a rescindment of the Gramm-Leach-Bliley Act coupled with the reinactment of the Glass-Stegall legislation that separated banking and investment banking is likely. Look also for an increased emphasis on international cooperation and a move forward on the DOHA trade talks.

Tax loss selling for Canadians ended last week, today it will end for American tax recipients (as opposed to payers) for there will be little in the way of capital gains entering government coffers this year. With this final lifting of much selling pressure comes the opportunity of a major rally over the coming weeks wherein market indexes are set to put in their best performance of the coming year. I fully expect index gains of 20 to 30 per cent before January ends along with individual stock doubles, triples and more among the more junior issues, particularly within the beaten down tech, biotech and commodity sectors. We should see 1100 to 1200 on the S&P 500 (presently 890) and equivalent gains across the board. This will all happen very quickly and will be over before most of you have mustered up the courage to join in the fray. You can if brave enough, make your entire year in these few weeks.

There are several trillion dollars sitting in 0 interest T Bills that will be put to work during this period and this probablity, combined with the 500 billion dollar energy cut at the pump and furnace, and the aforementioned relief from selling pressure make this prediction a logical one....that and a bit of history.

A happier year to all