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What to Expect from the Financial Markets in 2012

Your Money Resolutions - A CNBC Special Report
Your Money Resolutions - A CNBC Special Report

Resolutions are fine, but when it comes to investing, you need resolve, commitment and information.

Market volatility can make any investor question his strategy, sometimes prompting knee-jerk reactions to events and short-term trends.

At this point, there's little reason to think that 2012 will be a smooth ride.

To help set the table, we've culled somepredictionsabout the financial markets from CNBC anchors, editors and reporters.

Equities

  • The U.S. stock market has a rip-your-face-off rally.
    Sometime next year, the stock market will experience a huge rally that will make suckers of all the pessimists like me. Shorts will get clobbered; those sitting on the sidelines will look foolish. — John Carney

  • Equities gain but stock-picking rules.
    With the Fed on hold, and the economy chugging along at slow speed, stocks can still go higher. Strategists see just marginal gains in 2012. It should prove better to be a stock-picker than to just rely on those returns from sectors and indices. — Patti Domm

  • Hard times for ETFs and Chinese stocks.
    As market volatility continues, expect regulators and politicians to seek a scapegoat. The most likely target, because it has the least lobbying power: Leveraged ETFs. And accounting issues continue to hamper Chinese stocks that trade in the U.S. But with their stock values already pummeled, nobody cares. — Herb Greenberg

  • The U.S. stock market will continue to outperform Europe and the rest of the world. U.S. economic data in the fourth quarter is already outpacing Europe and will continue to do so at least into the first half of 2012. — Bob Pisani

  • U.S. stocks will rise 5 to 8 percent.
    Sure, we have problems, but the rest of the developed world has bigger issues and capital will continue to flow to, as one of my sources calls it, “the least dirty shirt in the laundry.” It won’t be a boom year for stocks, but continued solid earnings and expectations for a change in the White House should push equities higher. (Last year, I predicted the Dow Industrials would rise 8 to 10 percent and it's still possible.) — Brian Sullivan

  • Chinese stocks will outperform.
    With the property market offering deadbeat returns and interest rates remaining low (as the government tries to ease the pain of a housing correction), investors will finally return to stocks. After a three-year slump, Chinese equities will rally as investors realize the virtue of buying into a market currently trading at just 11 times earnings. — Deepanshu Bagchee

GoldPrices

  • Gold will exceed $2000 because the European Central Bank will have to print euros to bail out so many countries and banks, and that will raise the value of gold as a version of the world’s reserve currency. Gold will be a terrific performer once again. Mad Money’s been bullish on gold since we started and we remain bullish. — Jim Cramer

  • I think gold has basically peaked and is now a bit overvalued. My prediction is that people will buy more stocks than gold. I’m optimistic about the stock market, so I would not be a gold buyer. — Larry Kudlow

  • If I had to put my own money on the line, I would probably bet gold does break $2,000. The fact is there’s so much economic and political uncertainty in the world that people want safe havens. — Maria Bartiromo

  • The long-term bull market in gold marches on. Goldwon’t make a straight shot to a new inflation-adjusted high. Expect bullion prices to experience some pullbacks when the U.S. dollar is strengthening. The Federal Reserve has said it plans to leave interest rates near zero until the middle of 2013. As long as the real return on U.S. bondsis negative and other countries debase their own currencies, investors will turn to gold as an alternative currency and another form of protection against ongoing debt problems in developed and emerging nations. — Sharon Epperson

  • A stronger dollar will devalue everyone’s favorite speculative metal. Buying by emerging market central banks has propped up gold prices more than I thought possible, but cash and capital have better uses than a non-industrial metal, so I continue to expect a dumping of gold in 2012. That, and a stronger U.S. dollar, should drive the price down. Ignore the doomsday commercials. If indeed the Mayans are right, holding a heavy block of yellow metal won’t matter much anyway. Invest instead in a bunker and canned foods. — Brian Sullivan

Fixed Income

  • The yield on the 10-year Treasury hits 1 percent. The secular move into bonds, coupled with easy money around the world, will continue to push bond yields to historic lows. — Gary Kaminsky

  • Japan's placid bond market will slowly awaken from a deep, deflation-induced slumber. With 95 percent of Japan's government bonds owned by domestic investors, the government has been able to pay just 1 percent on 10-year bonds, despite running a debt-to-GDP ratio of 200 percent. That will change in 2012, as politicians fail to bring the deficit under control and ratings agencies take further action. As domestic savings find other channels, bond investors will wise up and hedge funds will see an opportunity. Still, the rise in yields won't trigger a crisis, given Japan's large current account surplus and large pool of domestic savings. But Japan's government will finally realize its finances are running on borrowed time. — Deepanshu Bagchee

Energy, Currencies

Energy

  • Retail gasoline prices rise above $4 a gallon.

    Oil prices may provide the foundation, but gasoline will likely take off on its own merits. Gasoline futures, more than oil, drive prices at the pump. Gasoline prices usually are at their lows in the fourth quarter and peak between March and May, as refineries undergo maintenance and switch from winter to summer-grade gasoline.

Further fueling the surge: the closure of a large refinery near Philadelphia and possible shutdowns of two more along the Delaware River. Fewer gasoline supplies along the East Coast, including the New York Harbor (which sets prices for RBOB gasoline futures) will push retail gasoline prices toward 2008 highs. — Sharon Epperson

Currencies

  • The euro reaches parity with the U.S. dollar.

    The common currency will be worth one U.S. dollar by year's end. My theory isn't overly complex. The ECB will be left with little choice in saving banks and their sorry sovereigns other than to print, print, print euros. And more of something almost always leads to a lower price. — Brian Sullivan

Commodities

Currencies

Mutual Funds

  • A nurse wears a special uniform to be protected from the Ebola virus at a state hospital in Kenema, Sierra Leone, in August 2014.

    American investors aren't panicked about the re-emergence of Ebola in Africa, at least in the long term.

  • Dollars are pouring into China again despite worries about the country's slowing economic growth. China's economy also still has its doubters, as do broad swaths of its stock market. Much of the worry centers on how well China can navigate a slowdown in its economic growth.

  • Fund managers may face tougher scrutiny by regulators than planned after their lobbying against a first proposal backfired, sources said.

Bonds

Stocks