Key points
- Global governments are dealing with rolling debt crises, which are translating to shaky investor confidence. We are concerned that many of the solutions being proposed will weigh on growth prospects, but are hopeful about short-term resolutions that restore business confidence and lead to more investment and hiring.
- The economic sluggishness globally continues, largely affected by short-term factors. We believe a rebound is likely in the second half of 2011, but are wary of policy mistakes and weak confidence. The Fed continues to hold steady, keeping short rates near zero and likely reinvesting maturing Treasury securities after QE2 ends.
- Greece passed the austerity package required to get short-term funding but much more is needed. And while the focus has been on Europe, it may be time to start paying more attention to the Asian region.
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