You will not have noticed, but global equity markets have risen well over 10% in general over the past four or five weeks – and are significantly higher even on European markets.
There has been some good news. Recent statistics show that the US is further from recession than was widely feared it would be although growth is sluggish and unemployment stubbornly high. Capital spending of American companies hit a high in the third quarter not seen since 2008. Expenditures rose 24% to US$43.3 billion in the third quarter for 140 non-financial companies in the Standard & Poor’s 500 that had released such data as at Nov 4. And leading US industrial and consumer companies are still posting better than expected profits.
As for China, the economy is slowing, but not yet in trouble . Jim O’Neill of Goldman Sachs (a bull on China), wrote over the weekend that if Chinese CPI inflation drops to 5.5/5.6% or so, that would be “comforting to those expecting a ‘soft landing'” even though China’s critics see evidence of a coming Chinese property crash and banking crisis.
Blame the Greeks and Italians for all the jitteriness. The Germans should send their panzer divisions and occupy these countries, loot them of their portable treasures, sell off the Greek and Italian islands to the rich Chinese and Indians, then bail the Greeks and Italians out.
But it may be wrong to read too much into this bounce because trading has been relatively thin.