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Monthly commentary July 2010

By July 9, 2010No Comments

SUMMARY  Markets have stabilised a bit in recent days, which is to be welcomed and provides some respite. But it is no time to relax, and the newsflow has been very poor. Nonetheless you can make money in this environment, as we cover in the latest edition of the TopFunds Guide please email back to confirm you would like a hard copy in the post.

Normally Bloomberg TV is best avoided – over-made-up presenters (and that’s just the men!) trying to find a point of interest out of every little tweak in some financial market, somewhere in the world. But if you were brave enough to venture into Bloomberg world last night you would have noticed a surprising consensus, and one with which we have some sympathy.

The gist of it was “we know there has to be pain to get us out of this [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][sovereign debt] mess, so can we please just get it over with”. In other words no more stimulus, no more quantitative easing, no more false hope; if there are people, companies (including banks), and countries out there that have no realistic chance of paying off their debts, then let’s face that situation now. If some countries can cope, but only after painful adjustment, then begin adjusting now.

Markets have stabilized a bit over recent days, and that is to be welcomed. But this is no time to relax, and the newsflow has not been great.

China’s slowdown has gathered pace, though that was at least their intention. Not so in the US where, despite extraordinary stimulus the manufacturing data was atrocious, export orders fell sharply (Eurozone woes are now at play in the US), the unemployment report confirmed the gathering gloom, their housing market is turning down again, and consumer confidence headed south.

What’s the good news? Well, at the moment the UK economy is almost a pillar of stability but it isn’t clear that this can last as the US economy rolls over. And the idea that a weak euro (normally good for exports) will save the eurozone is daft. Greece exports mostly to the rest of the eurozone. Will the US and China be importing more or less from the EU?

Of course it would be a game changer in the short term if new stimulus packages were announced, particularly if co-ordinated globally. In fact we should expect this at some point. But it isn’t clear that this would do much other than push markets temporarily, though sharply, higher, as happened from March 2009.

This is all covered in more detail in the latest TopFunds Guide, including a 5 point plan to continue to make money in the “age of austerity”.

Please email back to confirm you would like a hard copy of the TopFunds Guide in the post.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Dennehy Wealth