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John Brady's Global View for 2010

Dec. 27, 2009 12:36 AM ETEWZ, EZA, TBT
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MF Global’s strategist for interest rate products, John Brady, seesthe S&P 500 rocketing 18% to 1,300 during the first half of 2010,driven by enormous productivity gains that are creating historic profitmargins. A flood of money should hit the market just after the NewYear. Let there be no doubt that the world is in risk accumulationmode. However, while monetary policy will stay on hold for possibly allof next year, long rates will start to rise because of the sheer volumeof Treasury issuance. Think the (TBT). Investors will then start takingprofits into June, prompted by the uncertainties of the midtermcongressional elections and a possible “W” recession. John thinks thatemerging markets will keep devaluating their currencies to keep exportscompetitive and stock markets flying, but watch out for the volatility.China is a special situation. By tying the Yuan to the dollar, they areletting Washington set their monetary policy, and guess what? Bubblesare contagious. Like the rest of the planet, John loves Brazil (EWZ),and also South Africa (EZA), where gold, a rising middle class, and aninternational trade hub are the motivating stories. We are in a secularbull market for the barbaric relic, with a rise to $2,200 feasible, butdon’t be surprised if we tick at $800 first. Commodities look greatlong term as a synthetic short dollar trade. But the buck could rallyuntil mid year before a new big down leg renews. He is also a peak oilbeliever, and thinks the recent Exxon/XTO Energy deal speaks volumesabout the shortage of supplies. It’s cheaper to drill on the floor ofthe New York Stock Exchange than 30,000 feet down in the Gulf ofMexico. To hear the full 40 minute interview, please go to Hedge Fund Radio by clicking here

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