What 10 Things to look out for in 2008?

Year 2007 had a lot of upswings and downturns that will go down the history. In a best effort to look forward, we seek 10 things to look for in 2008. Predictions are not easy to make, and our views might change with situations. One need not take it seriously just for the sake of predictions and how the financial markets will perform or events that might be in place in 2008, we provide our 10 best predictions to happen in 2008. We did not include political events and others into consideration:

1) Fed will cut more rate to cushion the markets from a liquidity pressure, interest rates may be down to 3.25%. With this, Central banks globally will follow the trend and will cut rates

2)Gold and its cousin silver to see the uptrend. For the first time in history, gold to reach quadruple figure of $1000 and above, and will remain volatile with swinging as wide as $50 intraday

3)After Subprime, it time for the credit card along with consumer bubble to burst that would have a far reaching impact on the financial systems. Emerging markets will probably see the opposite trend- credit and consumer boom

4)Higher energy cost will bear down on household income. Oil to touch $100 and higher sometime in 2008

5)Citigroup to be in more trouble, with its stock price to be affected and more subprime write-downs in the line. Banking and retail sectors to remain under pressure. Rebound in the financial sectors is likely late Q'08

6)More Banking defaults, lawsuits and bailouts to come around since more subprime loans to be written down, and one is still not clear how much exposures do these banks have.

7)Inflation will be a concern in both the emerging markets and the US, particularly in China, Vietnam, India, Brazil

8)Commodities to ride high and one is to look for corn, wheat, maize, potato and soybean. Wheat, having multiple utilities is the best gauze for inflation, and demand for bio fuels will shoot up prices of corn which is one of the ingredients. China will reign as the largest producer of potato. Meat prices likely to go up in purview of shortages

9)Markets to remain highly volatile. Severe corrections are overdue in Emerging markets, but markets to produce above historical average despite some big corrections. One should target better alphas and mitigate Beta risks as far as possible-more diversification. Valuations will matter and P/E ratios could be the key. China bubble to burst after the Olympics, but will rebound

10)US to taste a recession and the dollar after a short rebound to go down further and depreciate 9% more, as also housing to roll down and reach the bottom line.

Right Horizons Desk.

Excerpts and adapted from '10 best of 2008', Seeking Alpha.com