Stock markets are emotional discounting mechanisms, particularly during times of crisis. Nevertheless, underlying economic conditions move much more slowly than emotions. This is why investors need to keep a sense of perspective at times when stock prices are falling. If the U.S. avoids a double dip recession and China glides into an economic soft landing, […]
It would be a stretch to expect an early return to normal – at least not to what we used to call normal. The destruction of balance sheet wealth and the damage to both the financial infrastructure and to confidence in the financial system will have lasting effects. Normality as we used to know it, […]
Reflationary efforts will gradually unfreeze the credit markets. Nevertheless, the need to unwind this decade’s credit excesses means that the economy will continue to face major headwinds to growth; financial conditions will remain fragile for some time. The longer the credit markets remain frozen, the deeper and wider the spread of economic contagion and the […]
Several conditions have emerged from the recent market turmoil: tighter credit, deflating real estate, monetary reflation, and a weak dollar. The strong themes emerging from these circumstances are: A) We are probably past the worst and won’t face recession; and B) We will see higher equity markets, stronger export growth and increased commodity prices.
Financial companies […]