Look for lower unemployment, higher taxes and more debt.  Despite the predictions of skeptics investors will regain confidence and markets will hit new highs in 2010.

Time magazine made Federal Reserve Chairman Ben Bernanke its person of the year.  The economy appears to be taking shape, his work will likely become one of the most remarkable transitions from rags to riches in American history.  Bernanke’s achievement was not necessarily what he didn’t do but more of what he did do to subdue an economy that could have collapsed in a way that the markets melted before the Great Depression.

This month marks the Trust Advisor Blog’s sixth month of publishing.  It marks an achievement that required me to wear two hats — relationship manager by day and writer by night.

Although I would have preferred to have basked on the beach in the Bahamas this weekend, instead I dug my heels into delicate research to come up with these predictions of what, in my opinion, will likely take place next year.

1.         Expect unemployment to head down, perhaps to as low as 8 percent.  As investor confidence continues to take hold, markets again will rise.  This will inspire confidence in businesses to rehire and expand.  This will in turn have a significant effect on employment.

2.         The U.S. dollar will likely improve as short-term rates climb next year.

3.         Interest rates will begin to rise in the second quarter of 2010 as inflation fears begin to mount and the economy continues to grow.

4.         Corporate profits will increase to the upside beginning in the first quarter of 2010.

5.         Small cap stocks which have been badly beaten in the downturn will rise dramatically making them one of the best performing equity vehicles.

6.         Financial regulation will attempt to begin in Congress but the mission and purpose will have been forgotten as most politicians have short-term memories for what took place in the last quarter of 2008.

7.         Anti–Madoff/anti-Stanford measures will take a backseat position as new issues emerge.

8.         ETFs will become the hottest financial vehicles for investors.  Innovators will package commodities, real estate and every conceivable asset class into an ETF so investors can consume them and reunite markets.

9.         Apple Computer will announce a large size iPhone – the size of a small book. It will have screen features like the iPhone and its apps will serve as a full computer. It will be called the  iTablet or something like that.  iPhone applications will appear on its screen.  It will have a Bose style sound system and give sound enthusiasts a walking, boom-box entertainment system.  iPhone’s competitors such as Palm and Blackberry will copy the concept. Amazon.com will likely partner with one of these firms to make its Kindle on-line books available for instant access.

10.       Americans earning more than $200,000 a year will be prime targets for high taxes.  Expect tax rates for up to 50 percent or more at those income levels without effective planning.  Trusts and other special purpose vehicles will be standard requirements for most high net worth investors and earners in this bracket.

11.       Healthcare stocks will boom despite gloom predictions that conservatives had during the healthcare debate.  The largest filled by the new entrance to the healthcare system will fund new technologies and be a boom for pharma stocks.

12.       A new rich will emerge again beginning a new seven-year cycle that will culminate a smarter rich that will harvest new technologies and exploit the weaknesses of the old.

13.       Offshore banks such as UBS and others will head to China to make tax avoidance and bank secrecy a mainstay for China’s new rich.  The government will begin to crack down and instead of handing out five-year prison terms for promoting tax avoidance they will begin executions.

14.       Mortality rates will increase by five years according to existing mortality tables due to genetic engineering and anti-aging drugs.

15.       Cybercrime will outpace every other type of known crime including violent crimes such as murder, assault and rape as a result of the continued expansion of the Web.

16.       Baby boomers will continue to require the services of trust intermediaries, as estate planning options will close as a result of tightened regulation.

For those of you who are around this week please enjoy your holidays, if you are driving drive carefully and hopefully we’ll see you all in the New Year.

Jerry Cooper, senior editor, The Trust Advisor Blog.