Another difficult year is drawing to a close. While the stock market had rebounded very strongly from its March lows, the health of the U.S. economy is still very much in question.

Of course, we will be very happy to see the worst of the recession behind us. A year ago, we were at about its worst point. For example, let’s take one metric, holiday sales. Last year, they fell 3.4 percent. Altogether, the 2008 shopping season was the worst since International Council of Shopping Centers ICSC started collecting sales data four decades ago. This year, consumer sentiment has been gradually improving and, in the contrast with last year, for the holiday season of 2009 the U.S. retail sales rose about 3.6 percent.

A year ago, oil was near its lowest point in five years (the low of $32.40 per barrel was set on December 19th of last year). Today, prices are closing on $79 again. While that is good news for most energy companies, especially in the short run, it could spell trouble for the still-weak recovery.

Gold, a year ago, was at $880 per ounce. Today, after hitting an all-time high of $1,226, it retreated, we think temporarily, to about $1,100 per ounce. Why temporarily? Because its fundamentals are still intact, and we view the correction as a normal part of a longer term uptrend.Read more...