The economic calendar is unusually light this week, with only the ISM Index reporting on Friday. It shouldn’t surprise anyone that the report will likely show a decline from the previous month. It has been an overriding theme this year that even though the bar gets set lower and lower as the months go by, the market still manages to underestimate the scope of the economic slowdown and reports continue to disappoint.

With the economic calendar being so light, I thought I would take some time to give you my thoughts on what I see happening in the markets over the next 12 months.

• As I mentioned in my piece on Dec. 17, I think the market will do well in 2009. There are just way too many coincidences lining up to lead me to believe otherwise. I still think there will be periods of decline, but overall, the market should close 2009 significantly higher.
• The banking industry will undergo historic consolidation. Like it or not, some of the $700 billion from the bailout will be used to buy up smaller banks. As larger banks scramble to right the ship, the deposit base of hundreds of smaller banks will be too hard to ignore
• The hedge-fund industry as we know it will cease to exist. Much like the investment-banking industry, the business model will come to an end. Regulators will be forced to rein in the industry as investors complain about mounting losses.
• The housing industry bottoms out during the first quarter or so, and then new regulations enacted by President Obama buoy the market. Foreclosures trail off as banks are finally willing to adjust loan balances to reflect market prices.
• Green investing finally gets the push it needs. Even as gas prices drop, people finally realize that long-term solutions are needed. “Green” stocks are one of the hottest sectors this year.
• GM and Chrysler are forced by the government to merge.

Source: Light Economic Calendar Allows For My Thoughts On 2009