Three market predictions for the second half of '08

Posted Jul 3rd 2008 4:53PM by Aaron Katsman
Filed under: Earnings Reports, Oil, S and P 500

With the 4th of July approaching, it's always a good time to get a bit of perspective and take a look at what may happen in the second half of the year. As with predictions they generally tend to never come true, but here are 3 market predictions for the 2nd half of the year.

1- Crude oil will trade down under $100/barrel. As global growth continues to slow, especially in overheated emerging markets, some of the the speculative froth will leave the market and the price will start heading down to a point more in line with fundamentals.

2- The US Dollar will rally against the Euro, and reach a level of 1.42 by the end of December, down from the 1.58 current levels. With European growth expected to potentially contract by more than 1% in the coming quarters, and the US staying out of recession, the market will re-focus on growth differentials in the for-ex markets, providing some much needed strength for the greenback.

3- The S&P 500 will stage a rally starting in the fall and close the year at 1450, up 15% from current levels. This would leave it fractionally lower for the year. As the economy stays out recession and corporate earnings and '09 outlook starts to improve, the market uses this as the much needed catalyst to move higher.

Only time will tell how accurate or not these predictions are. Let's check back Dec. 31st to see.

Happy 4th of July everyone.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/3/08.

Tags: Crude oil, CrudeOil, Euro, marketrally, predictions for second half 08, SP 500, US Dollar, UsDollar

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Reader Comments (Page 1 of 1)

7-03-2008 @ 7:25PM

Bobby Balogna said...

EXACTLY THE OPPOSITE OF EVERYTHING YOU SAID...
IF RECOVERY BEGAN ON MONDAY, IT WOULD TAKE 5 YEARS TO RECONSTRUCT INDUSTRIAL PRODUCTION FACILITIES IN THE USA WHICH HAVE BEEN ABANDONED.
TAKE A ROAD TRIP TO DETROIT KNUCKLEHEAD...AND SEE THE FUTURE OF THE FANTASYLAND YOU LIVE IN...
THE FOUNDATION OF ALL ECONOMIES IS LABOR AND JOBS...NOT CREDIT.

7-03-2008 @ 8:50PM

Sheldon L said...

The S&P cannot come back if the companies in the Index do not improve. Banks will not, Housing will not, car makers and airlines will not and so forth. What will lead? Not the tapped out consumer. I think oil will be lower but not $100, that might be optimistic. If oil does come down so will 25 other stocks with it, like the drilling companies, oil companies, and related S&P stocks.

Dollar may rally some.

Happy 4th to all!!

7-03-2008 @ 10:02PM

Tim Kathlina said...

These predictions are the most common optimistic predictions on Wall Street.

We are in year 8 of a secular bear cycle that started in 2000, which usually last 15-20 years.

Stocks will continue to under perform compared to commodities. Oil and GOLD will continue to climb higher, with the standard counter trend corrections.