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Top Trends for 2009: In no particular order, here are the global macro trends that we think will be most significant in the coming year (2009): 1. Credit crisis of 2007/08 will continue on into 2009…this one is clear…but, how long will it last? how will it fundamentally change international finance? Add your comments to our wiki… 2. Deleveraging of Financial markets will continue. In my opinion, this is the most destructive of all the trends. 3. Risk of deflation in the US as Fed Funds target rate approaches zero (other analysts see the opposite risk of potential hyper inflation). Add your comments.. 4. Changes are happening in China. We are especially concerned about the relations/ dependency between China & USA 5. Protectionism rises: free trade movement slows down in 2008 6. Fiscal stimulus expected in massive doses…but will it have any effect at counteracting the deleveraging process? 7. Monetary / Fiscal policy seen as ineffective…so expect un-conventional action from the Fed, such as quantitative easing 8. Rise in risk aversion - investors and companies are paying for safety (as negative Treasury yields have indicated) 9. Philosophical move away from "free markets" toward "bigger government". How far will the pendulum swing? 10. nationalizations will increase as companies go bankrupt, and look for protection. privatizations will increase as governments sell off assets to raise cash….which will be the more important force? 11. IMF will become more important, WTO might be sidelined 12. USA is losing stature (military seen as less strong, economy less of a model) 13. US dollar: will it continue recent trend of strengthening during the crisis? Or, will the weak dollar trend resume after the height of the crisis passes, and investors become concerned about excessive debt levels (which no doubt will be increased as we pay for fiscal stimulus packages proposed with the new administration)

This is extremely dangerous because it sets precedent for the other major trading partners.