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Predictions 2010: Analyst Vince Farrell

CNBC.com

1. The job picture will brighten suddenly.

The last three months have seen a small, begrudging increase in the number of temporary jobs. In January of 2009 the monthly jobs report registered a decline of 90,000 temporary jobs. Last month saw a gain of 34,000. Temp jobs are the early warning indicator light that the sands have shifted. I expect that this statistic will continue to improve and that "real" job growth will follow.

2. Fed tightening will support dollar.

When that happens the markets will view it (I think, I hope) as a sign that the recovery is on firmer ground and that before too long the Fed will have to start to drain some of the excess liquidity it has introduced. That will strengthen the dollar. Not so much as punish other currencies, but enough to stabilize the dollar against the yen and especially against the euro.

3. Gold will weaken.

2. Fed tightening will support dollar.

Predictions 2010 - A CNBC Special Report
Predictions 2010 - A CNBC Special Report

That should take some of the luster off the dollar/gold trade. I say should since the move to gold could be well more than a trade and a deliberate move by central banks to diversify their reserve holdings. I would not go short gold, but I would go long the dollar.


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Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC.