Friday, January 18, 2008

REALITY SETS IN : The downtrend resumes..

Markets around the world are correcting, amidst growing fears of a US Recession.

The US Stock Markets have had a rough start to 2008, and the FED seems helpless and unable to avert a severe slowdown. Small Cap companies are especially vulnerable due to their dependence on the US economy, as compared to Large multinationals that have a greater exposure to international markets.

Consumer Confidence is low.

Philadelphia FED DATA: The Diffusion Index of Current Activity.

Manufacturing in the Philadelphia region slowed significantly. The Index fell to a negative 20.9 in January, its lowest level since October 2001. Taken from the Philadelphia FED's Survey, it is considered to be the broadest measure of manufacturing conditions.

Bond insurers risk losing their AAA rating, as they struggle to raise fresh capital.

Any downgrades would really add to the turmoil in the credit markets.

Clearly not the right time to be buying stocks just yet. I expect gold prices to be volatile ahead of the rate cut, with some further downside likely if a world market sell off occurs.
GOLD will outperform, as overvalued markets correct this year.

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