There is no market outlook today. Markets are closed and I am enjoying my last day of holidays before diving into the new year.

Themes during 2011 are likely to include: strengthening of national balance sheets, improving corporate earnings and a focus on natural resources. Economic performance is likely to be stronger in developing countries compared to developed economies. Most income trusts have completed their conversion to corporations, while the remainder will remain as trusts. As Baby Boomers retire, there will be an increased focus on income and companies may institute or increase dividends in response to the demand for cash flow. Stocks are likely to outperform bonds as interest rates rise (I’m still expecting it). As Canada and the States both approach an election in 2012, expect to see promises from governments that are supportive of economic activity, such as tax cuts or increased benefits.

I’m spending my holiday money on stocks, so I’m hoping stocks will drop to cheap prices over the first week or two of January, then quickly recover to make me appear as a genius. Wouldn’t that be nice?

Market Outlook January 3, 2011

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