Sunday, July 25, 2010

The certainty of an “unusually uncertain” environment

During testimony to the U.S. Congress last week, Federal Reserve Chairman Ben Bernanke noted that the outlook for the economy is “unusually uncertain.” In Germany, the Ifo institute reported a significant increase in business confidence for June. In the UK, the Office for National Statistics said its preliminary estimate for gross domestic product was an increase of 1.1% for the second quarter. At the same time, a closely followed index (because of its “better than most” ability to identify potential US recessions) from the Economic Cycle Research Institute (ECRI) had its Weekly Leading Index (WLI) decline for the seventh consecutive week to -10.5.

MY TAKE: It is unlikely the number of crosscurrents confronting investors will decline in the near term. Consumer and business sentiment continue to be on a roller coaster ride as concerns about potential government spending cuts, tax increases and managing sovereign debt issues persist.

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