Street Critique" -Hilary Kramer, Chief Market Strategist at Greentech Research
Wednesday, December 24, 2008
PAUL KANGAS: While 2008 has been an ugly year in the markets, tonight's "Street Critique" guest sees a recovery taking hold in mid- 2009. She is Hilary Kramer, author of "Ahead of the Curve" and chief market strategist at Greentech Research. Hilary great to see you again.
HILARY KRAMER, AUTHOR, "AHEAD OF THE CURVE": Nice to see you, Paul.
KANGAS: Before we get to your predictions for next year, what happened to this year's Santa Claus rally?
KRAMER: (INAUDIBLE) because Bernard Madoff, which is the $50 billion Ponzi scheme rip-off has really rippled through the entire market from Asia, Europe, to the U.S. and so a Santa Claus market has -- it's actually evaporated because there are more net sellers and no one out there is buying.
KANGAS: So very subdued?
KRAMER: Very, very much so, and most hedge funds, 95 percent are in cash right now.
KANGAS: Let's get to your thoughts on the coming year. First the markets. Where are we going?
KRAMER: I believe in the first six months, everyone should be very careful, all investors. We could see the Dow dip to 7500. S&P could have another 25 percent downside, but then I see a remarkable recovery. The market will come back up. It's a leading indicator when rates go low. You're going to see a lot of investors who forget how bad things were come back into the market and try to recoup some of those losses. We could end up higher on the year for '09. But don't just rush in or if you have some concern in the market, sell, hold out, wait for the real bottom to come.
KANGAS: Well, 2008, as we know, was the year of the bailout. Are we going to see some more of that?
KRAMER: Absolutely. And it will be in the auto industry but we're going to see some new surprises, for example, retail, hospitality, leisure. The commercial real estate developers have asked for a $200 billion bailout. So there's going to be bailouts across the board.
KANGAS: What about the U.S. dollar?
KRAMER: Oh, the U.S. dollar, this is a major problem that I see that's brewing because ultimately it will create inflation. But right now, we are printing so many dollars. Did you know that some were outsourced to Switzerland to print? That's how come the U.S. government can't print it fast enough. Dollars are sticking together when you get them from the bank. But what's happening is, it's too much money being printed and then we have the recovery. It's just an economic equation. We will have significant inflation (INAUDIBLE) inflation.
KANGAS: That would be good for gold, wouldn't it?
KRAMER: Absolutely. And that's why I see a recovery with gold. Because what happens, is with the dollar down, you're going to have other investors around the world -- in China, in Europe -- starting to look for other currencies or other forms of investment and that may lead them to gold and gold investments if they don't want their money in the U.S. dollar.
KANGAS: Do you have a target price for gold?
KRAMER: I do, absolutely. I think that gold could reach $1400 during 2009.
KANGAS: We have less than a minute left. We've got to get your predictions on oil.
KRAMER: I do see that oil will rise. It will come back up. There's no question because we will start to have some recovery take place,and you know, we've had a surplus in the pipeline. But I don't see it going back to $100 a barrel of oil, $60 to $70 but this is my big prediction which is that we are going to see a major depression take place in the Middle East because the Middle Eastern countries, Dubai, Bahrain, what they've done is they have spent so much money based on future cash flow expectations of $150 a barrel oil. So, Paul, expect some real problems out of the Middle East, and we're going to see some attention paid there.
KANGAS: Back here at home, what happens to the employment picture?
KRAMER: I believe that unemployment -- the unemployment the government puts out will rise to 10 percent. But real unemployment, true unemployment of those who aren't working who want to could reach 20 percent. I'm seeing it pervasively across the board in all industries, in all demographics, especially the auto industry, if they have the bankruptcy that I expect that it will have.
KANGAS: Hilary, I want to thank you for sharing your predictions with our viewers and a happy holiday.
KRAMER: Paul, thank you very much and I hope for the best for 2009.
KANGAS: I'm with you. My guest, Hilary Kramer, author of "Ahead of the Curve."
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