Predictions 2011: John Kilduff On The Markets And Yemen

1. Emerging markets will falter.

Led by China, emerging markets will experience a notable slowdown. The aftermath of the decline in the value of the U.S. dollar and the defensive currency and fiscal moves made in response by emerging market countries will cause these economies and markets to reel. China, in particular, will experience the difficulties associated with micro-managing an economy.

2. Energy prices will trade lower.

Crude oil will trade as low as $50 per barrel. A mild winter, due to the La Nina weather effect, and slowing demand out of Asia will pressure on prices into mid-year. The glut in natural gas inventories will help those prices fall below $3.00 per MMbtu on the NYMEX. Gasoline prices at the pump will fall to $2.25 per gallon.

3. The dollar will rally.

The U.S. dollar will see a significant rally, as European debt worries renew themselves—this time over Spain and Portugal. A nascent recovery in the U.S. economy and improvements in the U.S. unemployment rate will further support gains versus the Euro and Yen.

4. The U.S. will take military action in yemen.

Due to growing terrorism fears over a disintegrating Yemen, there will be direct U.S. military action there. Concerns about terrorist activities spilling into Saudi Arabia, Yemen’s neighbor to the north, will amplify concerns over the region and engender significant action against Al Qaeda assets in the country.

5. The Federal Reserve will steps back from quantitative easing.

In response to withering criticism and an improving economy, the Federal Reserve will temper its bond purchase program. Sighting improved liquidity, an improving housing market, and positive trends in overall employment, The Fed will claim victory and curtail the program in the spring.