Aside from the droning-ever-backwards euro-mess, the US elections are the main event overshadowing the investment world. As always, the news is not good. However, markets can be resilient, so there might be a silver thread or two amid the clouds. Two questions arise. Will the USA be worth your investment dollars? And how will the US impact the rest of the world?
In less than a year, we'll know the outcome of the next presidential and congressional elections. At this point, the outlook is not encouraging. Though at the moment US equity markets look better than some, I am still advising investors to hold their fire (and their money of course).
Since the slight downgrade in the US credit rating, a number of other issues have conspired to unsettle markets even further. Euro-debt problems and worries about declining growth in many countries are obvious concerns. However, a number of people are saying now is the time to buy. Can a buying window be said to be open even if the glass is shattered?
US President Barack Obama faces international condemnation following his assassination of Republican election chances in 2012. Almost single-handedly (well, with the help of a couple of dozen US Navy SEALS), he has scuppered the hopes of a myriad of hopeless hopefuls to become President, Senator, Representative, Governor or local dog-catcher in the US elections next year.
The recent (slight) downgrading of US government debt has understandably received much pubicity. However, the problem is far from new. For a dozen years or more, America has been blithely sailing into troubled waters. How near is it to hitting the rocks now?
Because they have nothing constructive to say, some of the more insipid investment journals occasionally publish the latest Coppock Indicators. The current ones suggest selling Japan, Europe and the USA. Is such information useful or merely for the misguided?
The Japanese equity market has probably over-reacted to that country's current troubles. One might note that the yen has actually appreciated slightly while the stockmarket dived.
Is this a buying opportunity?
Governments have long had clever ways of keeping inflation at bay, mainly by not measuring it properly in the first place. But don't be deceived.
Not overmuch to worry about this time around, assuming the Middle East is still settling down. The much-publicised rise in the oil price is in fact fairly modest in view of the turmoil in Libya. Hopefully the spike will be temporary.