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Economic Review

3/15/2010

The story of 2010 thus far….subdued markets.

We’re quickly approaching the end of the first quarter of 2010 and the story across the spectrum of many financial markets is consistent….listless moves and perhaps some risk aversion from confused investors.  US Stocks thus far have posted about a meager 3% gain when considering the S&P, while yields on 10 Year treasuries are about a whopping 10 basis points below their levels at the beginning of the year.  Spot Gold is just about flat on the year thus far, the Yen is a couple of big figures stronger in 2010 and even the much talked about thrashing of the EURO versus the US$ has amounted to roughly an incredible 5% move (that was sarcasm if you didn’t pick up on that) from the levels posted at the end of 2009.

So what’s the story behind these knee jerk, back and forth, grinding and weak trending markets?  Uncertainty, lack of fundamental support to some market levels and perhaps some risk aversion.  The hype has continued to focus on a return to economic growth and a sustained global rebound, however issues grounded in reality such as a bankrupt California, Greece, Unemployment at horribly high levels, negative real US interest rates,  unsustainable debt levels and a continued floundering of real estate tells of a different story.  Stocks are grinding higher but the trust in the move is suspect at best.  Treasury Yields are still a focus to being managed by authorities.  The US dollar recouped some of its massive losses but has recently run out of steam again.

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