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Don't Fear Inflation — Fear This: Strategists

Markets edged lower on the final trading day of a wild 2009. John Merrill, founder and chief executive officer of Tanglewood Wealth Management, and Andrew Kanaly, chairman of Kanaly Trust Company, shared their market strategies.

“We have a lot of good things going for us as we enter 2010…the economy has done better than expected, leading indicators indicate that that should go on well into 2010,” Merrill told CNBC.

Merrill said investors should not be concerned about any inflation problems until at least the second half of 2010.

“There’s still a tremendous amount of oversupply, not only in the U.S. but around the world, which is going to keep inflation pressures low, and which will allow [Fed Chairman Ben] Bernanke to keep the interest rates low for the foreseeable future,” he said.

In the meantime, Kanaly said quantitative easing is expected to continue for "some time."

"You may see a change as early as the second half just in [regulators'] language and that will spur a big change in interest rates and the whole complexion of the yield curve," he said.

“We’re very short maturities, very high quality—we had a big quality bounce this year and everybody enjoyed that,” he added.

“But there’s going to be big credit concerns in 2010. Remember that the banking issues are still there, and both commercial credits and mortgages—and that’s all yet to play out.”

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Disclosures:

No immediate information was available for available for Kanaly or Merrill.

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