Sunday, March 20, 2011

Confronting geo-political information overload

Five significant global dynamics, each with its own set of economic consequences, are confronting investors: 1) the Japan earthquake - catastrophic, 2) unrest in North Africa and the Middle East - unpredictable, 3) European sovereign debt - problematic, but perhaps manageable, 4) China's growth - uneven with some inflation and 5) the U.S. recovery - positive, but with a significant fiscal deficit and persistent unemployment issues. Individually, analyzing each item is a challenge. Collectively they are shaping the dynamics of global growth for years to come.

MY TAKE: In the short term, investors will likely confront a mix of both fundamental analysis and reactive speculation on each of these topics. As a result, markets will continue to be volatile in the short term as investors react to each positive and negative news item.

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