Global Developments: Green Shoots?
In the last couple of months, we have seen the stock market rise,
together with the increase in prices of commodities (including oil).
Meantime, the forecast is that the US dollar, the world’s reserve
currency, will go on a downward trend in light of a still faltering US
economy, increasing unemployment, and the surge in the US budget
deficit due to the US$800B allocation for TARP (Troubled Asset Reform
Program).
…So the signs are not as encouraging as the stock market would like us
to believe. But these stock market investors still hope that everything
will be fine soon. They interpret events and financial reports here
and there as “green shoots.” I say brown for now.
Investor confidence, as you see, is tied up to the stock market, and as
they say, reflects the economy of the country. Caveat emptor: This
incremental rise in prices is not tied to fundamentals. It is going to
be the same traditional adage: P/E [price-to-earnings] ratios, my
friend, will be the rule from now on. We wait till the market gets its
bull market run, maybe in a couple of years. Then we’ll be back to the
same good old days of venture capitalists and future earnings
speculation—and a lot of moolah to make everybody smile once again…