How the stock market will react this year will depend heavily on the economic performance of the United States. Consensus forecasts expect a 3.5% growth in the economy and inflation to fall as oil prices drop to $39 by end of 2005. Base rates will increase to 3.5% from 2.25% and the dollar will fall an average of 10% against major currencies.

However, to invest wisely you must not only take into account the general forecast but be aware of what may change this and react quickly to these changes. Here are five scenarios to watch out for:

1. US Dollar crash. The need for US to attract foreign capital to finance public and private investment could provoke this disaster.

2. Oil Prices – for good or for bad. Experts predict both extremes, an increase of up to $80 or to reach a low of $25. Lets hope it’s the latter.

3. Inflation. This depends on both oil prices and exchange rates, so twice as unpredictable.

4. Housing bubble. If interest rates increase sharply, expensive mortgages may make house prices unaffordable and a weaker housing market could provoke the bubble to burst and prices to fall.

5. Global growth. What happens in other parts of the world also affects the US, so slow growth in Europe or Asia could produce a significant slowdown in the US economy, not to mention a new large scale terrorist attack or new quests for weapons of mass destruction. These last two have a enormous negative influence on business confidence and are almost impossible to predict.

But lets try to think positively, I’ve found two interesting articles in BusinessWeek that provide two tips on where we should place our savings:

• BRICs
• US companies oriented to the Hispanic market.

BRICs is shorthand for Brazil, Russia, India and China. At the moment, these economies are only 15% of the size of the G6 economies. However, experts suggest that they could be larger than the G6 in just four decades. But real opportunity lies in consumer product companies that operate in these countries because the BRICs’ middle class will increase from 250 to over 800 million in 10 years (more than the population of US, Western Europe and Japan combined), this middle class has already had positive effects on the sales of cars, mobile phones, clothes, etc.