A bumpy ride ahead for the markets

This year is likely to be one of major turbulence for the markets, with big swings in both directions, says Martin Spring. Here, he looks at what we can expect in 2010.

If 2008 was the year of terrifying collapse and 2009 the year of the rally on a rising tide of recovering confidence, 2010 is likely to be a year of major turbulence, with big swings in both directions.

The rally in risk assets losing momentum, but not yet over, as I write has been driven by an abundance of virtually-free central bank credit, an unprecedented peacetime spending spree by governments, excellent corporate earnings thanks largely to savage cutting of labour costs, some rebuilding of emptied inventories, and recovery in bank profits thanks to cheap credit, changes to accounting rules and renewed opportunities for speculation.

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