Courtesy of Bruce Krasting.
A year ago I made a number of projections for 2012 (Link). The following are ones that I got more right than wrong:
- Mitt Romney will be the Republican presidential candidate. The election will go to Obama. The battleground states will be Pennsylvania and Ohio. Billions will be spent on getting the votes in those states. Republicans will retain their majority in the House.
There will be no new legislation of significance in 2012.
In December of 2012, the Fed will be free to initiate another round of QE. An $800 billion Large Scale Asset Purchase (LSAP) will follow. The Fed’s new POMO operations will be divided equally between Treasury bonds and Agency Mortgage paper.
Europe’s economic problems will not be solved. Every effort will be made to kick the can down the road. Neither the can nor the road will collapse; that will happen in 2013. EU GDP will struggle to hold zero.
The US housing market will stabilize. Rental costs will rise by 7%. This, coupled with extremely low debt costs, will increase the demand for homes.