Jack Albin, US Porfolio Strategist put out a "Outlook for Financial Markets for January, 2010. (He is a good read - summary points follow):

*An 8th of government stimulation has now made it into the economy. "Unfortunately, credit contraction is so severe that a second wave of financial stress is lapping on the shores."

*Balance sheets around the world are under stress and besides keeping interest rates low by buying government debt central banks are relatively powerless in restoring troubled debt levels.

*Good news is that home values are improving and sales of existing homes have popped

*If 10.2% unemployment (US) is the peak, then historically central banks wait 19 mos before moving benchmark rates higher which puts interest rate increases occurring sometime in 2011

*Central bank is buying between $3 & $4 billion of mortgage backed securities every day with this program set to expire March 31st

*Corporate bonds have benefitted as investors seek higher yields.

*Recently high dividend stocks have led the rally with telecom and utilities having spent most of the year trailing but now investors seem to be looking for more attractive yield alternatives to corporate bonds. Utilities offer .5% higher yields than intermediate term corp. bonds

*BMO/Harris Private Bank approaching 2010 with "cautious optimism." Having moved 65% off the market bottom, the market is no longer cheap. But cash on the sidelines remains high. Given low interest rates cash should continue to flow into higher yielding riskier assets. S&P currently trading 18% above its 200 day average. "History suggests that the S&P gains on average, 15% in the 12 months subsequent to trading at such levels. A 15% advance in 2010 has the potential to stretch valuations, but the combination of a government-induced economic tailwind, low short-term interest rates and cash on the sidelines could continue to fuel the cyclical rally."

*Treasuring yields on 10 year around 3.43% whereas at their peak in 1981, the yields on the 10 year reached 15.8%. "Current bondholders would see red ink should rates rise as little as one-half percent over the next 12 months."

*Biggest financil risk retirees face is the loss of purchasing power through either higher inflation or a substantially weaker US dollar.