2009 Recap

2009 can be described as an amazing year filled with turbulence and relief, after market participants endured a tumultuous 2008. Asset prices for most major classes rebounded from levels not seen in years. As major markets began to bottom in March of 2009, investors made their way back into riskier currencies, equities and corporate bonds. The Euro rallied against the dollar from $1.32 to above $1.50 a 14% rebound. The Australian dollar presented one of the largest rallies, moving up more than 25% from March through December. The equity markets, which were pounded the most in 2008, rebounded the most in 2009. The S&P 500 Index rallied more than 68% from its nadir in March of 2009. The NASDAQ composite rallied 76% from the bottom in March 2009, and it has retraced almost all of its losses, experienced in 2008.


Central banks across the globe played an important role in creating a transition from dire economic straits to potential robust growth. From May to September the term “green shoots” was used relentlessly, as economies around the world began to see the benefits of very low interest rates and quantitative easing. The majority of the G8 cut interest rates and created stimulus in the forms of liquidity, which included purchases of mortgages and corporate bonds, as well as, tax credits.


As the year progressed many economies began to see growth especially those countries in which their banking system did not have tremendous exposure to the housing market. Both Australia and Canada showed strong growth, and employment picked up in the middle of the 3rd quarter. The Reserve Bank of Australia decided to tighten interest rates at the end of the 3rd quarter with an idea of heading off inflation expectations. Canada with 30 plus thousand jobs created in November (which is equivalent to 300,000 jobs created in the US) is close to creating a tighter liquidity environment.

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