Anthony Peters, SwissInvest Strategist
The monetary authorities all remain clearly on a cautious tack while corporate results point to better times. After a few years of heavy wage restraint, industrial levels of pay are slowly moving forward again; with this consumer confidence and, far more to the point, the desire and ability to consume again will regain momentum.
In his recent speech, Fed Chairman Ben Bernanke pointed to some of the discrepancies in the data where job creation is moving up while overall output numbers don’t, so far as he can see, either justify of reflect the improving labour situation. If the head of the Fed can’t make head or tail of the stats, what chance for us?
The most uncertain time in markets is when things are turning as indicators are mixed.
Talking to decision takers in the “real economy” reveals a simple approach which is that although things will remain tough out there for a while to come, there is less fear of a “double dip”. Things not getting worse is as good as things getting better for although we cannot expect aggressive capital investment focused on expansion on the back of that, plant replacement which has been on ice for some time ought to begin coming through. This is where those famous green shoots will be coming from and in time – it might be a long time – they will help to turn the economy.
However, that is the grass-roots business scenario. Meanwhile, the suits in the City and Wall Street are supposed to place their bets and invest in order to be measured on a daily mark to market basis. The most uncertain time in markets is when things are turning as indicators are mixed. Perhaps it would be more honest to admit that indicators are always mixed but to acknowledge that when markets have a clear view of the direction in which they want to go, they develop an uncanny ability only to see the statistics which support that direction.