Remember that trends always run further and longer than investors expect. So what does that mean at the moment?

U.S. outperformance. The U.S. stock market will continue to be the best performing stock market in the world into the summer. The Bureau of Economic Analysis report Friday on first-quarter gross domestic product numbers didn't put a period to that trend.
 
Way back in January, I said that the U.S. economy would grow more strongly than expected for the first half of 2010. I think that's still the case.

U.S. financial assets will continue to get the support of cash from investors who aren't happy with the turmoil in Europe or rising interest rates in the developing world. (Yes, the U.S. financial sector will be a big drag on U.S. stocks, but as big as the sector is -- 17% of the Standard & Poor's 500 stock index -- it's still not the whole U.S. market.)  

I think U.S. outperformance will run until investors begin to seriously anticipate interest rate increases from the Federal Reserve and an end to monetary tightening in Brazil, China, India, and the rest of the gang. I don't see either the Fed raising interest rates or an end to tightening in the developing world until the end of 2010.  

Using the rule of thumb that says the stock market anticipates news by six months, that leaves me looking at U.S. stocks to continue their run through June. (For more details, see this post).

Please note that I'm not calling for soaring returns from U.S. stocks; the U.S. stock market has got its own set of worries. But I do think that this is the best place -- in relative terms -- to look for stock market gains in the next few months. 

Emerging markets. Interest rate increases in developing economies that will keep a lid on stock prices in emerging stock markets are just getting started. Brazil's central bank raised interest rates Thursday in the first of what is expected to be four to six interest rate increases that will run through the end of the year.

 
Other developing countries are either roughly on Brazil's schedule (India) or still hoping that they can somehow beat back rising inflation while avoiding raising interest rates (China). I think this will make it hard for emerging market stocks to do much more than march in place until late summer or early fall. (For more on Brazil's interest rate increase, see this post.  For more on China's inflation battle, see this post) 

Crisis in Europe. Europe has months to go before it puts the Greek/Portuguese/Spanish crisis behind it. Expect more weeks like the last one, where markets bounce between despair--the European Union is breaking up -- and elation -- the crisis is over.
 
It will take at least the rest of the year to play out the question of default for Greece (yes, still a real possibility even after a bailout plan is finally in place) and worries that the crisis will spread to Spain. Spain has to roll over a huge $300 billion in debt in 2010. (Remember that Greece's need to roll over $11 billion in debt by May 19th has been enough to keep financial markets in turmoil.)  

The sovereign debt crisis is like an onion -- peel away one layer and there's yet another ready to make you cry. At the speed with which Europe's leaders have moved in this crisis, markets will be lucky to see a convincing resolution in 2010 (For more on the politics that makes it so hard to end this crisis, see this post).

If you conclude that this all adds up a tough year for equities, I think you're absolutely correct. But it does suggest that if you want the best chance of making some money this year, you should look to U.S. markets in the near term and then to emerging markets at the end of the year.