Just a few months ago it was 'deal fever' all over again and this fear of a double of dip recession was present but not causing a great deal of concern. Until of course the dreadful month of May was followed by surprisingly weak unemployment figures from the US (sans those for employed temporarily for the US census). We were all hopeful until Hungary sounded a possible beginning to the Eastern European debt crisis.
Trichet commented that the debt situation in Hungary is exaggerated and not comparable to Greece. (addit : 15 Mar 2012 - he was probably right!)
There is enormous concern in the world about a double dip recession and this has caused significant volatility in financial markets. If the S&P 500 falls below its key 1040 support level there may well be another leg down.
Australian Prime Minister Kevin Rudd has embarked upon a number of disastrous policy that have become stuff-ups. Firstly, he shelved the Emissions Trading Scheme that was a major platform for his election campaign. His problems have continued with his surprise introduction of the Resources Super Profit Tax (RSPT) which he revealed unexpectedly to the market and without industry consultation. This has caused uncertainty in the Australian mining sector and introduced a world-wide concern that Australia is country in which there is sovereign risk when making large mining investmenta given the government could act in such a unilateral way.
The fall in Euro has its benefits, with countries like Germany able to sell their goods overseas at more competitive prices. A stronger Germany will stabalise Europe. However, the issues of sovereign debt default in European and now Eastern European countries is creating uncertainty in markets.
The US jobless (non-farm payrolls) released on the 4th of June with only a small rise in new jobs after taking out the temporary effect of citizens employed for the US census.
The concern now is a double dip recession may be a looming, if the the strength of the US economy shows signs of losing its momentum.
No comments:
Post a Comment