Good news, bad news and wild cards in the wings
It is difficult to comprehend the depth of the dramatic political, financial and social upheavals occurring in Japan, the Mid East and Northern Africa right now. It is even tougher to predict how profoundly these upheavals will impact the world’s tightly interwoven economies. We are already seeing how these events are changing the game in some investment sectors.
You’ll want to read this month’s report carefully to understand how global events are affecting your investments right now and how they could evolve. Meanwhile, consider these points.
The U.S. Economy is Seeing Some Recovery. We have seen some positive corporate earnings reports, a drop in the unemployment rate, expanding manufacturing numbers and more mergers. However, even taken together these economic improvements give the U.S. little room for error and missteps can come from any direction at any time.
Payrolls, Politics and the People. Corporations are slow to put their earnings into hiring, politicians are cutting government payrolls and under-employed consumers are waiting to see where their next dollar is coming from before they spend the dollar they have.
The U.S. Real Estate Market is Still Struggling. After a short respite in foreclosure filings, we are again anticipating more mortgage defaults. This increase in cheap inventory will further depress housing prices, slow new construction and keep buyers on the sidelines until the dust settles at the bottom.
Japan’s Catastrophe Spreads Around the World. I’m not talking about radiation. I’m talking about interrupted supply lines. Just when manufacturing numbers are improving, Japan’s disrupted exports will force industries around the world, especially the technology industry, to adjust production output downward and production costs upward.
No “sure thing” in sectors. Choosing the best sectors to invest in is only part of the solution in the current geopolitical climate. Even in booming sectors like commodities, agriculture, energy and technology wild cards that could tumble even the most promising trends.
We have seen how quickly the markets respond to crisis. With so many uncertain factors in play, it is critical that investors keep abreast of the changes. Study these monthly reports and consult with your financial advisors before making any decision.