The Financial and Capital Markets
The markets have made little, real progress over the past week. Volatility has certainly reared; but direction and momentum have been notably absence. This is not a new state for the markets however. Underlying risk appetite hasn’t shown any meaningful progress (whether it be bullish or bearish) for nearly three weeks. A rebound from some equity benchmarks and commodities is more of a response to the tumble that developed through since the year began. Evidence of this break between price action and fundamental current can be linked to the relative health of the US dollar. This currency is a key funding currency and is prominently featured as the market’s safe haven. And, through the rebound in these other markets, the dollar has been able to either hold its ground or forge fresh eight-month highs. Investors and speculators are well aware of the looming risks in the market place. Withdrawing government support in the US and globally is making the masses more sensitive to the many risks that exist in the market. At home, the FDIC recently reported a 27% increase in troubled banks through the fourth quarter to its highest level since 1993. Furthermore, write offs for consumer debts, mortgages and other poor performing investments is eroding capital. Looking beyond the US boarders, the troubles are more virulent. Greece in particular poses a considerable threat to stability.
