Don Reynolds' Annual Financial "Seance"

Don Reynolds, of Smith- Barney in Fort Worth, gave his annual predictions on Wednesday. Here are some of the things he had to say:

• The US economy in 2005 was quite resilient (considering all the big events), and exhibited the lowest marker volatility in 80 years.
• In the coming year we'll need to pay attention to the (troublesome) actions of foreign leaders like Ahmadinejad of Iran & Chavez of Venezuela.
• Watch for an extension of tax cuts - or the negative stock market reaction to a non-extension.
• Watch to see how new Fed Chairman Ben Bernanke (info here and here) takes over from Greenspan (who is leaving at the peak of Baby Boomer productivity).
• Handling the "housing bubble" without destroying the economy will be his major short term challenge.
• He expects consumers to slow spending, but for corporations to increase.
• He observes that an inverted yield curve (our current situation) usually - though not always - signals a downturn within a year and a half.