All eyes appear turned towards China this week – the possible epicenter for either recovery or a lack thereof. A sharp drop in the Asian nation’s markets may cast a ripple effect of the same to other markets across the globe. Fears have been set to bubble over that stimulus in China cannot continue at the current level. Their national demand – as it fits both basic commodities as well as the wider needs of their burgeoning middle class – was cited as the first stop in any road to global recovery. A failure or stumble in Chinese growth will likely translate into the same for other nations. It would appear that recent estimates or hopes for China’s economy may have been overly optimistic.
Comments by Warren Buffett were also moderately disparaging as the billionaire suggested that the US may be fiscally doomed. Huge amounts of money have been used since the official start of the recession as the Fed aimed to encourage the sparks of hope while performing a triage on the nation’s banking system. Lingering effects of the so-called toxic assets will likely continue to threaten banks even after the nation moves into growth and recovery. Buffett’s implications were that delicate after-care may be required to keep the US dollar from flatlining.
On the other hand, the latest market movements seem to suggest that the US dollar – as well as the nation as a whole – may still be seen as a vibrant beacon, and a possible place for investment. The lower-yielding currency may also be tempting as a place to put assets during this stretch of uncertainty as to when – or if – recovery will happen anytime soon.
Across the rest of the headlines, relatively benign CPI and PPI reports felt like a non-event while certain retail sales continued to suggest weakness. Consumer confidence is somewhere south of dismal at this point. Job creation (or at least stability) seems like a fiction. Until the average citizen feels confident that they will remain on the payrolls – or find their way back on them – it seems unlikely that purchases will be made. Savings may remain more important than new tvs or phones, and necessary outlays (like new school supplies) will likely be made through the cheapest retailers. That kind of disheartening view of the coming months may deliver another 5 to 10 percent pullback as the market heads into fall.
Past Performance is Not Indicative of Future Results.
Past Performance is Not Indicative of Future Results.
Disclaimer: Futures and options trading involve substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results.
